Guarantee Fund; a New Approach to the Development of the Islamic Securities Market

Issuing sukuk is an important step in developing Islamic capital market in Iran. Since the start of issuing sukuk, different types of sukuk including musharakah, ijarah, murabaha, parallel salaf, and istisna have been issued. A comparison of statistics and data related to issuing sukuk in Iran and other Islamic countries shows that the volume of sukuk in Iran is much smaller than that in other Islamic countries. We need, therefore, to identify the problems and challenges of sukuk market in Iran and present operational solutions to develop this market. The pathological study of the Islamic sukuk has shown that one of the serious challenges in its development is related to guarantee principle and return of issued sukuk.
In this research, we present an initiative solution for guaranteeing Islamic sukuk which can help opening the door for small and medium entrepreneurships and corporations with different levels of credit risk to enter the Islamic sukuk market resulting in its expansion and persistence. Sukuk guarantee fund is a mechanism based on mutual participation of fund members who are originators of issuing sukuk. In this research, we try to identify and analyze important components in designing sukuk guarantee fund, so we discuss components like managerial and ownership structure, mobilization of resources, investment strategies, and default risk coverage through sukuk guarantee fund.