Course Overview

Treasury operations in Islamic financial institutions must balance effective liquidity and risk management with strict adherence to Sharia’a principles. Without robust controls, institutions may face financial instability, compliance breaches, and reputational risks.

The Islamic Treasury & Risk Management Products course by Transformentors Academy provides participants with practical expertise in managing treasury functions within a Sharia’a-compliant framework. Over five focused days, the programme covers key areas such as Islamic interbank instruments, tradable products, foreign exchange (FX) risk management, and profit rate risk solutions. Participants will explore instruments including Murabaha, Tawarruq, Sukuk, and permissible hedging mechanisms.

With a strong emphasis on real-world treasury environments and regulatory requirements, this course equips participants to manage liquidity, mitigate financial risks, and ensure compliance with ethical and Sharia’a standards.

Agenda

Day — 1 Introduction to the Nature of Money in Islamic Finance

• Understanding the characteristics and functions of money and their implications for treasury operations in Islamic finance
• Exploring contract law and Sarf rules from a Shari’a perspective for currency exchange and financial transactions
• Examining Riba Al-Nasiah, its prohibition, and its impact on financing and lending practices
• Identifying Shari’a-compliant criteria for selecting tradable assets
• Reviewing traditional money market operations and their key features, including:
  • Deposits
  • Interbank transactions
  • Tradable instruments
  • Repo mechanisms
• Understanding Islamic depository instruments and their governing principles:
  • Non-remunerative deposits
  • Remunerative deposits
• Analysing interbank relationships and pricing methodologies within banking environments, including:
  • Fund Transfer Pricing (FTP)
  • Interbranch Pricing (IBP)

Day — 2 Islamic Interbank Tools

• Understanding the key similarities and differences between major Islamic interbank instruments, including:
  • Murabaha
  • Tawarruq
  • Reverse Murabaha
• Examining Shari’a considerations in interbank transactions and how scholars address compliance concerns
• Analysing the role and challenges of market infrastructure and instruments, such as:
  • Brokers
  • Over-the-Counter (OTC) arrangements
  • Live warrants
• Addressing technical issues in pricing and valuation of Islamic interbank products, including:
  • Breakage
  • Back value
  • Compounding considerations
• Understanding Suq al Sila and its practical applications in facilitating commodity-based transactions
• Examining the concept of Islamic fund leakage and strategies to mitigate associated risks
• Exploring alternative interbank instruments and structures, including:
  • Investment Wakalah methods
  • Traditional interbank approaches adapted for Shari’a compliance

Day — 3 Tradable Instruments and Repo

• Exploring key traditional tradable instruments used in money markets, including:
  • Certificates of Deposit
  • Government securities
  • Banker’s acceptances
  • Commercial papers
• Comparing yield-based and discount-based quotation methodologies
• Understanding the structure and investment function of Sukuk in Islamic finance
• Examining the role of short-term, high-quality Sukuk instruments in meeting liquidity and Basel III requirements
• Analysing longer-term Sukuk structures and their tradability, including:
  • Ijarah Sukuk
  • Istithmar (investment) Sukuk
  • Asset-based vs. asset-backed Sukuk
• Understanding the mechanics of conventional repo transactions and their treatment in Islamic finance
• Discussing Shari’a concerns related to repo structures and exploring permissible alternatives for liquidity management

Day — 4 Forex Transaction and Forex Risk Management

• Understanding the fundamentals of foreign exchange (FX) transactions and key concerns in Islamic finance
• Examining the implications of Riba al-Fadl in currency exchange and its impact on FX transactions
• Exploring Shariah-compliant alternatives for FX operations, including:
  • Promise-based (Wa‘d) structures
  • Promise to deposit arrangements
• Analysing hedging strategies used by Islamic banks to manage FX risk, such as:
  • Long Murabaha structures
  • Back-to-back promise arrangements
• Examining Shariah-compliant FX option instruments, including:
  • Arbun (earnest money contracts)
  • Wa‘d (unilateral promises)
  • Ju‘ala (service-based contracts)
• Understanding the calculation of effective and break-even strike rates in Shariah-compliant currency options

Day — 5 Rate Risk Management

• Understanding the concept of rate risk in Islamic finance and its impact on financial performance and stability
• Reviewing conventional interest rate risk management tools, including:
  • Forward Rate Agreements (FRAs)
  • Interest rate futures
  • Swaps
  • Interest rate options
• Analysing how option-based strategies are adapted conceptually within Islamic markets, such as:
  • Interest rate caps
  • Interest rate floors
  • Interest rate collars
• Exploring commonly used Shariah-compliant rate risk management tools, including:
  • Profit Rate Swap (PRS)
  • Cross-Currency Swap (CCS)
• Understanding the structure and application of Profit Rate Swaps (PRS) in managing rate exposure in Islamic finance
• Comparing Cross-Currency Swaps (CCS) with Cross-Currency Deposits, highlighting key similarities and differences in structure and usage

Learning Outcomes

After completing the Islamic Treasury & Risk Management Products training course, participants will be able to:

• Understand the nature and functions of money in Islamic finance and their implications for modern treasury operations
• Apply Sarf rules and Shariah contract principles to regulate currency transactions and financial structures
• Identify key prohibitions in Islamic finance, such as Riba Al-Nasiah, and select tradable assets in compliance with Shariah requirements
• Evaluate Islamic depository instruments, including non-remunerative and remunerative deposits, and their regulatory frameworks
• Analyse Islamic interbank instruments, including Murabaha, Tawarruq, and Reverse Murabaha, and assess pricing and valuation considerations within a Shariah-compliant context
• Understand tradable instruments and Sukuk structures, including their market positioning and alignment with regulatory frameworks such as Basel III
• Examine repo transactions and identify Shariah-compliant alternatives to address regulatory and operational concerns
• Manage foreign exchange (FX) risks using permissible hedging techniques, including promise-based solutions and cross-currency arrangements
• Assess rate risk in Islamic finance and apply Shariah-compliant tools for effective risk management

Who Should Attend

The Islamic Treasury & Risk Management Products programme is designed for professionals involved in treasury operations, risk management, and Sharia’a compliance within Islamic financial institutions, including:

• Treasury managers and treasury officers
• Risk and compliance specialists
• Investment and portfolio managers
• Product development professionals in Islamic finance
• FX and liquidity managers
• Sharia’a advisory practitioners