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Innovating in Sukuk Capital Markets - structuring financial products on DLT

A joint paper from Clifford Chance, Wethaq Capital Markets and R3

08 July 2019

We are excited to announce the release of a new paper: "Innovating in Sukuk Capital Markets", covering the structuring of complex financial products on R3's Corda platform.

Capital markets have become increasingly global in the last ten years and a vast network of issuers and investors have come together across a growing portfolio of products. Islamic finance products, such as the popular Sukuk instruments, have contributed to this growth, but can be uniquely complex to document and structure. Blockchain/distributed ledger technology, legal tech and ‘smart clauses’ can help to optimise the value chain of Sukuk instruments from origination and structuring to issuance, administration and trading.

Jack Hardman and Rafe Khokhar from Clifford Chance have been working with Wethaq Capital Markets and R3 to develop a conceptual framework for the issuance of sukuk instruments through a single platform using the distributed ledger technology, Corda, developed by R3.

While the first arrangements to be automated are the various administrative functions (delegate, registrar, paying agent etc.), cashflows (bookbuilding commitments and coupon payments) and the management of the Sukuk certificates (issuance, allocation and registration), the platform programming is planned to expand to include monitoring events of default and their consequences as well as general governance principles.

We consider this an exciting project in the Sukuk space in particular but also for the development of fintech in debt capital markets generally. There are clear conceptual benefits explained in detail in the report and we expect future issuances through the platform to demonstrate increased efficiencies and costs savings.

To read the full report, click here.