Placement of Sukuk can be done in various ways, including a private placement. Typically the level of disclosures would differ between a private and a public placement depending on the sophistication of the investors. A private placement is meant for more sophisticated investors and would generally require somewhat less disclosure. Private placement does contribute to liquidity issues as it is a simpler and usually involves a quicker time to market. This allows more Sukuk to be issued in the market to build up the scale for an active secondary market. The effectiveness of private placements and other types of Sukuk placements depends on how the market is facilitated and regulated by the regulators. Currently, too many jurisdictions that aspire to have a Sukuk market do not have an effective regulatory framework for the issuance of Sukuk. People harped on too much about global issuance and they forgot to develop their own local Sukuk market.
BADLISYAH ABDUL GHANI
Sukuk are used as wholesale rather than retail instruments, the major investors being banks, including both Islamic and conventional banks, and Takaful companies. There are a few individuals of high net worth who hold Sukuk, but this only accounts for a very minor share. Usually single investments in Sukuk are counted in millions of dollars rather than in small amounts, and marketing to small investors would be expensive. Arguably it might reduce rather than help liquidity, as small investors might simply hold rather than trade Sukuk. A more promising way for small investors to get exposure to Sukuk is through Sukuk funds. These are alternatives to corporate bond funds, and are offered by a number of fund managers. The fund manager aggregates the subscriptions and purchases a substantial quantity of Sukuk rather than minor amounts. In the UK, National Savings and Investments is considering making Shariah compliant alternatives to conventional bonds available to retail investors. This would be distinct from any possible Treasury issuance of sovereign Sukuk, which, like conventional Treasury debt, would be targeted at the wholesale market. PROFESSOR RODNEY WILSON Director of Postgraduate Studies, Durham University
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