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Sukuk Liquidity

19th December 2006   Warren Edwardes interviewed by John Foster, of Islamic Business & Finance Magazine more

“In an open economy, it is inevitable that Sukuks are benchmarked against conventional interest bearing assets”, says Warren Edwardes, CEO of London based innovation and risk consultants Delphi Risk Management. “The massive liquidity in the Middle East has made a pressing need for a liquid secondary market somewhat academic. Despite the massive increase in issues, Sukuks are still oversubscribed but held as long-term investments rather than as liquid trading assets. But they still have to be priced fairly.

There is currently little evidence of active switching between ‘cheap and ‘dear’ Sukuks or yield immunization and arbitrage by Islamic bank treasuries and fund managers but this will come sooner rather than later so it is a very positive development that institutions are developing Sukuk secondary market trading operations. However even when Sukuks become liquid there is still a pressing need for shorter term Shariah compliant instruments to allow prudent and modern bank asset & liability and liquidity management.

Warren Edwardes

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Warren Edwardes is CEO of Delphi Risk Management, the London-based financial product creativity, communication and control consultancy.

Warren was previously on the board of Charterhouse Bank and has worked in the treasury divisions of Barclays Bank, British Gas and Midland Bank. He first researched into what were later to be called "derivatives" in 1975 and was part of the team that executed one of the world's first currency swaps in 1981. Since then he has devised and transacted numerous structures that form part of the history of derivatives. Warren can be contacted via we@dc3.co.uk

Warren Edwardes <note  spelling of edwardes> is author of best seller "Key financial instruments: understanding and innovating in the world of derivatives" which includes an appendix on Islamic Banking.  see http://dc3.co.uk/kfi

Delphi Risk Management: Delphi creativity Delphi communication & Delphi control are the Innovation, Communication & Risk Management arms of Delphi Risk Management Limited 

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