“Clear Street is the product of founder pain and the solution to a decades-old problem. It was founded by industry experts. They experienced the difficulties with limited access and missed opportunities caused by operating on outdated infrastructure,” mentions the company.

Tracing The Venture’s Growth Path

Established in 2019, Clear Street is all about combining highly skilled product and engineering talent with seasoned finance professionals. It works with the principle of ensuring faster, reliable and instant access to brokerage and capital market-related data for the clients.

“Markets are moving faster than ever. Infrastructure needs to move with it. We make around 6,000 updates to our platform each year and are constantly refining our processes to help you move with today’s fast-paced markets,” stated the venture, which uses its cloud-based technology to onboard an institutional client in 14 days.

After its inception in 2019, Clear Street initially started serving prime brokerage clients through invitation-only methods, apart from offering institutional-quality trading and execution, securities lending, margin financing and processing trades of US equities through the venture’s clearing and custody platform.

Even in 2020, the year which saw the outbreak of the COVID pandemic crippling the global economy, Clear Street continued its march, as it finalised the acquisition of a broker serving sophisticated traders to seed platform growth, apart from delivering over 500 product updates including support for US options. In the same year, it also received regulatory approval to offer portfolio margin financing to clients.

In the following year, the start-up touched the milestone of handling over USD 3 billion in trades on an average trading day, apart from adding another 120+ employees to support rapid client growth and product development. It also grew client equity on its digital platform to a total exceeding USD 1.5 billion.

In 2022, Clear Street launched its fixed-income repo business with the build-out of a senior team, apart from expanding its prime brokerage sales team further, along with raising USD 165 million in a Series B funding round, thereby bringing its valuation to USD 1.7 billion.

Last year, the start-up received a strategic investment from IMC Investments, the venture capital arm of global market maker IMC. It also raised USD 270 million in additional Series B funding, increasing to USD 435 million, thereby breaching the valuation mark of USD 2 billion. It has also made strategic hiring in its investment banking division, while acquiring a cloud-native futures clearing platform, apart from expanding its asset class service capabilities to include fixed income.

Knowing The Services

Clear Street’s scalable prime brokerage platform provides optimal clearing and custody solutions for market participants, without limitations on firm size, return profile, or strategy. The venture gives its clients access to clean data so the latter can make more informed decisions, faster.

“Our strength is sourcing liquidity with both high- and low-touch execution capabilities. Our focus on operational excellence makes us a leading destination for securities with corporate actions, warrants, rights, and more. We cater to funds with complex strategies and provide trusted execution services from 4 AM to 8 PM US time. Global execution is coming soon to Clear Street,” the venture remarked.

“Our proprietary securities lending and funding platforms have allowed us to build extensive distribution channels to support the liquidity needs of our clients and borrower counterparties. We provide best-in-class financing, securities lending, and client risk technology for all trading strategies,” it continued.

Clear Street’s Capital Introduction team also provides a tailored and bespoke service for each client, with unparalleled access to allocators, regardless of size. The start-up’s allocator network has the ability and appetite to invest at all stages of its clients’ life cycles. Clear Street’s corporate access team is also known for delivering exceptional customer service, focusing on strategic meeting allocations that expose leadership to unique investors.

By starting its operations with prime brokerage, Clear Street introduced innovations in the domain, by bringing out a tech-first platform, that redefines the clients’ business relationship with capital market brokers, with improved access, speed, and service for investors. Clear Street’s goal for the days ahead is simple: to introduce more innovations into the capital markets, that will positively impact investors, financial institutions, active traders, market-makers, and fintech apps.

‍”Our platform is built directly on the ground floor of capital markets. We’re integrated with central clearing houses and exchanges. We’ve agonised about our data model abstractions, created horizontal scalability, and crafted thoughtful APIs. All so we can create better product experiences,” said the start-up.

The Innovation Called Clear Street Studio

“Clear Street Studio,” introduced by the start-up in 2023, is an all-in-one portfolio management platform, which aligns with the venture’s vision for the future of prime brokerage. Currently in private beta mode, Clear Street Studio will allow managers to access risk and margin, exposures, P&L, and analytics reports at the touch of a button.

“We’ve spent years building our cloud-native platform for clearing, custody, risk, execution, and securities finance. Now, we’re building products on that platform,” the start-up described “Clear Street Studio” in the following words.

Talking about Clear Street Studio’s development timeline, in July 2023, the venture introduced its “Initial Risk Management System,” which gave its brokerage customers access to real-time positions, PnL (Profit and Loss), and other metrics, which will also be available via APIs.

Then in September, came the Execution Management System (EMS), a crucial component of the “Clear Street Studio,” which will now allow customers to manage their brokerage risk by being able to send orders directly through Clear Street Studio. A month later, Clear Street Studio got another game-changing component, called “Initial Portfolio Management System,” which will provide historical portfolio performance analytics and attribution.

Introducing Next-Generation Investment Bank

Here, we are talking about another innovative tool from the start-up, which is a broad suite of financial solutions paired with Clear Street’s best-in-class sales, trading, and prime brokerage platform.

“Our clients benefit from senior industry bankers supported by the partnership of Clear Street’s burgeoning technology-focused platform,” stated Clear Street about its next-generation investment bank.

Clear Street’s investment banking team has created a separate space for itself in the 21st century brokerage and capital markets ecosystem by providing clients and investors with a broad suite of financial solutions, including equity and debt capital markets, M&A advisory, and corporate access.

Talking about Clear Street’s investment banking-related activities, it has been serving as a financial advisor for ventures like Vivakor (acquirer and developer of clean energy technologies and environmental solutions) and Third Pole Therapeutics. Clear Street’s investment banking-related activities cover a wide variety of industries, including healthcare, media, energy transition, and technology and business services.

Clear Street In News

On April 2024, the start-up expanded its operations into futures clearing and execution services, after launching clearing for registered market makers in listed US equities and options.

Andy Volz, Chief Operating Officer of Clear Street, told Markets Media that when the company began building proprietary technology about five years ago, the long-term goal was to clear every product in every market globally. The venture decided to first tackle US equities, and then added US options among its operational priorities.

“We had a good amount of successful growth in clearing, executing and financing those asset classes. In the summer of 2023, we added support for US fixed income and around that time, we started a significant build-out to support futures,” remarked the official.

In July 2023, Clear Street acquired React Consulting Services and its cloud-native futures clearing platform, BASIS, which has been integrated into Clear Street’s existing cloud-native clearing, settlement, execution, and custody platform.

As of April 2024, Clear Street is clearing about 3% of equities volume daily, equivalent to roughly USD 10 billion, and Volz expects the tally to increase, with a similar trajectory for futures clearing. Clear Street has also submitted a registration for a broker-dealer in the United Kingdom with the European nation’s Financial Conduct Authority.

The post Start-up of the Week: Through cloud help, Clear Street eyes transforming brokerage ecosystem appeared first on International Finance.

Chief Executive Officer and Managing Director of NI Capital Mohamed Metwally, in an exclusive interview with International Finance, spells out the company’s current and future strategic plans, and sheds light on the Egyptian economy and capital markets. 

NI Capital’s latest acquisition was Arabeya Online. Why was the retail brokerage company chosen for the acquisition in particular and how does it fit in with NI Capital’s strategy? 

Acquiring Arabeya Online comes at a strategic juncture for NI Capital, after a year-long of analysis and negotiations that were finally concluded last November. We chose Arabeya Online because of its distinguished electronic trading platform and wide retail customer base. The company operates through 13 branches and 90 percent of its client base conduct their trades online. Arabeya Online was ranked fourth as it relates to retail brokerage and seventh in its overall ranking YTD relying on a wide network of retail clients and its dedicated team of employees. It has executed transactions exceeding 16 billion Egyptian Pounds YTD.

The synergies between NI Capital and Arabiya Online will lead to an obvious expansion in the business of both companies. There will be further expansion in the latter’s institutional client base, in addition to playing the role of the distribution arm for financial products generated by NI Capital.  Arabeya Online will act as a platform for promoting investments in the Egyptian capital market through public offerings and secondary trading. 

At NI Capital, we strive to expand the breadth and depth of service products provided to our corporate, institutional and government affiliated clients, as well as diversifying our revenue stream through a well-established retail client base. 

After finalising the acquisition, what lies in the pipeline for NI Capital in the near future and for 2021?

We are in the process of executing an ambitious expansion plan in our asset management business by launching a new money market fund, and significantly increasing our Assets Under Management. For this year, we have increased our assets under management from EGP1 billion to EGP1.5 billion through launching the National Investment Education Fund, in addition to getting a mandate on a EGP300 million equity portfolio. We expect to double our assets under management from EGP1.5 billion to EGP3 billion by the end of 2021 through launching new funds and acquiring new portfolios—to leverage the distinguished performance of our asset management team.

NI Capital will continue to expand its non-banking financial activities through 2021, by adding a consumer finance line of business to its activities.  It is worth noting that NI Capital owns 30 percent of the shares of Tamweely Microfinance, one of the leading microfinance companies operating in Egypt with 61 branches, portfolio of loans exceeding EGP1 billion, and 70,000 customers. Furthermore, we are currently studying expanding into nano-insurance services, as part of our efforts to build an integrated non-banking financial platform and contribute to the financial inclusion initiative of the government.  

Where does NI Capital currently stand on the Egyptian government’s IPO programme and when is it expected to go live?

NI Capital has been assigned to coordinate a public offering programme for state-owned companies to stimulate investments into Egypt’s capital markets, expand the depth and breadth of the Cairo stock exchange and diversify sources of income to the Egyptian government through monetising some of its stakes in state-owned companies. However, the Covid-19 breakout that unraveled in the first quarter of 2020 caused waves of economic uncertainties and a “flight to quality” among international and domestic investors.  

Consequently, liquidity was diverted towards T-bills and CDs in state-owned banks that offered an annual return of 15 percent tax free risk free. This offering managed to raise more than EGP350 billion in just six months and resulted in a slowdown for investment activities in equity capital markets and housing markets. To put this figure into perspective, this is more than the aggregate free float on the Cairo Stock Exchange today. This liquidity should be released back into the capital and housing markets between March and September of 2021. 

The team at NI Capital and other investment banks which are mandated to manage some of the offerings, used the slowdown in capital markets’ investment activities to continue and finalise the preparation work for the offerings. We expect to see a resumption of the marketing activities in the first quarter of 2021.

Based on your market expertise, what is your current assessment of the Egyptian financial market?

As previously stated, Covid-19 has negatively affected the Egyptian stock exchange and financial market as it did to the rest of the world. However, the Egyptian economy has performed well despite the pandemic, thanks to a well-diversified economy, and the swift actions of the government through a balanced social welfare programme and monetary subsidies to mitigate the impact of Covid-19 on those affected by an almost shut down of the tourism and hospitality sectors, and temporary workers who were affected the most by the partial lockdown of general economic activities. 

Additionally, the government has embarked on a comprehensive economic stimulus package through an easing monetary policy and financial sector initiatives to alleviate debt pressure on businesses and individuals during the lockdown. The central bank of Egypt has lowered interest rates by 4 percent since March 2020 to stimulate the economy and reduce the impact of the Covid-19 situation on the badly affected sectors, mainly tourism.

The average monthly tourism revenues for 2020 declined around 90 percent, with tourism bringing in between $80 million and $150 million a month compared to an average of $1 billion a month last year. Nevertheless, there has been a slight increase in foreign reserves recording $39.221 billion by the end of November 2020, compared to $38.425 billion during September 2020, mainly through an increase in the flow of workers remittances.

Going forward, we expect the release of the EGP350 billion of liquidity back into the real economy and capital markets at the maturity of the 15 percent certificates of deposits from March to September 2021, and the resumption of flow of international investors in 2021 to reinvigorate the capital market.  We also expect tourism activities to resume normalcy toward mid-2021 pushing GDP growth rate to between 4 to 5 percent levels. This is anticipated to have a positive impact on the financial performance of companies listed and traded on the Cairo Stock Exchange and on investors appetite.

The post NI Capital is stimulating Egypt’s capital markets appeared first on International Finance.

This rare central bank news conference is following a spate of weaker readings in recent months from China—the world’s second largest economy—after a sharp drop in its yuan currency against the dollar, and a plunge in Chinese stock markets.

China’s policymakers remain focused on shifting their priorities to reducing risks to growth, as the country’s economy cools down, and the impact of the US trade tariffs begins to be felt. Smaller companies in particular, are havin a tough time securing loans and have to grapple with rising borrowing and operating costs – fueled in part by a lengthy official clampdown on riskier lending like shadow banking.

The PBOC has stated that it will “effectively ease” companies’ financing problems and improve their coordination with other agencies to ensure monetary policy measures are being transmitted into the broader economy.

Analysts are further expecting further cuts in corporate taxes and fees– and the central bank has specified that some funds that are freed up from reductions in banks’ reserve requirements should be earmarked for loans to smaller businesses.

Beijing is also accelerating infrastructure spending to cushion the economy as it braces for the blow from escalating U.S. tariffs. Still, the growing stream of new stimulus measures and easing credit policies have raised fears that debt reduction may be put on the back burner again.

China’s Vice Premier Liu He emphasies the need for the country to beef up capital markets and broaden financing channels for small and medium enterprises on Monday.

China’s economic growth rate slowed slightly to 6.7% in the second quarter year-on-year(YOY)—which is still well above the government’s full-year target of around 6.5%. But some key activity indicators have weakened more sharply and policymakers are getting anxious. Fixed-asset investment is currently growing at the slowest pace on record, while non-performing loans surged in the second quarter, defaults climbed and the jobless rate rose to 5.1%.

The post China says it won’t resort to strong stimulus but will keep liquidity ample appeared first on International Finance.

“I’m delighted to announce that we have the support of one of the largest cryptocurrency brokerage firms in the world,” said Steve Swain, CEO of Lendingblock. “Octagon Strategy has established itself as the go-to institutional brokerage for the cryptocurrency market, and brings extensive industry expertise and unique market insight that will be invaluable leading up to our launch later this year. There’s a great compatibility between Lendingblock and Octagon Strategy teams, as we are fully aligned in our aim to create the highest standard of financial services within the cryptocurrency space.”

“Securities financing plays a vital role in efficient capital markets, but barely exists for digital assets” said Wayne Trench, CEO of Octagon Strategy. “We’re very pleased to be working with the innovative team at Lendingblock as they bring the securities lending model to the digital assets economy. They are a team who understand institutional needs, and clearly have the experience and expertise to deliver. We look forward to working together to fill this gap in the market.”

The post Lendingblock announces partnership with Octagon Strategy Limited appeared first on International Finance.

The Capital Markets sites will cover the Misys FusionCapital suite of products for Treasury and Capital Markets. Corporate banking will include the Misys FusionBanking solutions in Lending and Transaction Banking. This will complement Synechron’s prominent track record in these markets and its long-standing systems integration capability.

Brian Gibson, Vice President, Partners and Ecosystem at Misys states, “Synechron has a very strong capacity to innovate with robust digital expertise and its leading-edge Accelerators for Blockchain and Artificial Intelligence developed in its global Financial Innovation Labs (FinLabs). We were impressed with their deep knowledge in digital, business consulting and technology and are thrilled to work on combined solutions in Transaction Banking, Lending and Capital Markets.”

Faisal Husain, Synechron CEO and Co-founder adds, “Misys is a leading global financial software company, and we are impressed by its ability to offer the broadest and deepest portfolio of financial software on the market. We have worked on several projects using FusionCapital technologies and have been inspired by the company’s open and componentised software. Synechron is eager to grow its experience with integrating Misys solutions across our shared clients. We are sure that this partnership will be beneficial not only for both companies, but for our clients.”

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21st June 2013

“Money can’t buy happiness, but it can buy you the kind of misery you prefer” goes an old adage.  It explains the indispensability of money in general and its impact on our lives in particular.

In this exclusive story, International Finance Magazine reports the rising of the world’s richest person, Carlos Slim, his phenomenal rise from a trader to a business tycoon, his business acquisitions, contributions as a Philanthropist and other accomplishments in a high flying career.

His gold and silver mining company, The Miniera Frisco may be shut temporarily, he may have lost his monopoly on the telecommunication sector in Mexico, but Carlos Slim Helu, 73, is the second richest man in the world behind Bill Gates. Born to catholic parents of Lebanese descent, he had his primary education in Mexico.  Slim and his siblings were trained on basic business practices by their father early in their childhood, by 12 Slim had bought shares in a Mexican Bank. He studied civil engineering at the National Autonomous University of Mexico where he also taught algebra and linear programming. He started his career as a trader in Mexico before starting his own brokerage firm called Inversora Bursatil. Slim married Soumaya Domit in the same year. His father’s teachings proved to be very useful for Carlos Slim, as he and his family lived modestly, while re-investing the profits from the business for future expansions and acquisitions.

Carlos slim with his wife( Soumaya Domit) in his younger days.

His business intelligence and acumen, a trait acquired from his father helped him to acquire businesses which he believed were undervalued and skillfully overhauled by their management. He diversified methodically, investing in real estate, followed by investments in construction Equipment Company and mining. His portfolio diversified to include a printer and tobacco company. His fortunes turned in 1982, when Mexico plunged into a crisis. When businesses and investors started to move out of Mexico, Slim took over Reynolds Aluminium, General Tires and Sanborn’s chain of stores and cafeterias. As the economy recovered Slim’s fortune increased and his acquisitions accelerated. However, one of the crucial breakthroughs in his business career was the acquiring of major stakes in the government owned telecom company, Telefonos de Mexico, this acquisition of major stake in  the government owned company proved to be a master stroke and proved his business acumen. Soon his company America Movil had become the largest wireless service provider in Latin America. Slim’s America Movil controls 80 % of the Mexico’s landline market and 70 % of the wireless market. However, the telecommunication reform bill will hit hard on his company. It gives Federal Institute of Telecommunications the power to revoke operating licenses for monopolistic practices and to stop companies from controlling more than 50 % of market share.

By the end of 2007, his group of companies was valued at $ 150 billion. By 2010, Slim had been ranked as the richest person in the world by Forbes.

As rightly said “What we have done for ourselves dies with us and what we have done for others and the world remains and is immortal”, Slim’s contributions to charity is stupendous. In 1995 he established Fundacion Telmex, a broad ranging philanthropic foundation. The Telmex foundation is one of the largest philanthropic institutions in Latin America, in addition to its activities in health, nutrition, conservation and disaster relief; it has provided university scholarships for hundreds of thousands of students who would otherwise be unable to pursue higher education. In May 2011, Slim was mentioned in Forbes World’s biggest givers after donating $ 4 billion to his foundation.

The post The Rise of a Telecom Billionaire appeared first on International Finance.

Tim Evershed

December 10, 2014: There must be more sovereign sukuk issued by non-Muslim countries after the success of previous bond launches, delegates were told at International Finance Magazine’s EU Islamic Finance and Banking Summit in London on November 18-19.

Recent years have seen successful issue of sovereign sukuks from the non-Muslim governments of the UK, Luxembourg, South Africa and Hong Kong.

This year has been a landmark one in Europe for sovereign sukuk with the UK and Luxembourg governments breaking new ground. The UK’s issue was for £200mn and attracted orders of over £2bn from investors. It will pay out profits based on the rental income from three government-owned properties in lieu of interest.

Meanwhile, the Grand Duchy issued the first sovereign sukuk in Euros from a national government. It was €200mn and it was two and a half times over-subscribed.

Marco Lichtfous, Partner, Deloitte, said: “So far we have concentrated on the corporate side and the wholesale side. There’s a need for sovereign paper so the issue that has taken place can’t be a one-off and it can’t be the end of it. For Luxembourg, the programme is ongoing and it is more a matter of finding the right need for and the right opportunity rather than just shuffling money around. We want to use it to help the economy grow.”

It has taken a long time for national governments to catch up with the sovereign sukuk issued by the German Federal State of Saxony-Anhalt in July 2004. It was a €100mn issue, which matured in July 2009, had tenure of five years with the rate of return linked to the six-month Euribor and paying a margin of 100 basis points over the benchmark.

However, Richard de Belder, Partner at law firm Dentons, says that the UK’s first issue has changed the paradigm for sovereign sukuk in Europe. He said: “There has been a big shift in the issue of sovereign-issued sukuk. The UK’s commitment has been going on for quite a while, but it is just one part of a bigger picture.

“Vital impetus came from Eddie George, the ex-governor of the Bank of England, who had been shocked to find out that his Muslim neighbours could not find a sharia compliant mortgage. George’s view was that it was wrong that any UK citizen should have been excluded from being able to access such finance.

“There were tax and regulatory barriers to overcome. Regulatory changes have been made to create a level playing field. The aim is not to put Islamic finance ahead of other finance but to treat it equally. And changes to tax rules have eliminated double tax charges.”

“The UK government did not need to issue a sukuk in order to fund itself because the gilt markets provide more than enough. It did it because the Islamic finance industry had liquidity requirements.

“Issuing that sukuk sent out a message, and an important message too, that the UK is open to Islamic finance. And it also wants to see more corporate sukuk being issued.”

According to de Belder, the next UK sovereign sukuk is a work in progress and will most likely be aimed at an infrastructure project, such as social housing, possibly in conjunction with a local authority. Other opportunities being considered include projects that include export finance, student loans or takaful insurance.

The attractiveness of sovereign sukuk was again underlined on the first day of the conference when Turkey borrowed $1bn through its 10-year dollar-denominated sukuk issue.

Muammar Cakir, Head of Derivatives Market at Borsa Istanbul, told delegates: “It was a successful launch and we are very happy and excited. We believe it will encourage the corporate sector. It is a defining moment for the sukuk market.”

Related Stories:

Market for takaful in Europe is looking brighter

Spike in interest rates could hamper Islamic finance

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Camille Paldi

September 22, 2015: More than 750 Islamic Investment Funds have been established around the world with assets under management (“AUM”) totaling approximately $60 billion compared to 70,000 conventional funds with AUM of $19trillion.  Currently, a wide variety of Shari’ah compliant asset classes are available for investment, including equity, sukuk, real estate, commodities, leasing, trade finance, private equity, structured products, REITS, and exchange-traded murabahah, ijarah, balanced,  index, and hedge funds.  Hot spots for global Islamic investment funds include Luxembourg, Ireland, and the Cayman Islands, collectively which host 12% of the total Islamic funds available globally.

The Islamic asset management industry is also growing rapidly in the Asia-Pacific region, including Malaysia, Brunei, Singapore, Japan, South Korea, China and Indonesia.  In terms of distributing investment products, international fund managers offer offshore funds in the Middle East by using Bahrain, the UAE, and Qatar as distribution platforms.

Noripah Kamso, author of Investing in Islamic Funds, A Practitioner’s Guide, states that Islamic funds are no longer an alternative to conventional funds, but are now competing with conventional funds.  She points out that financial centres from Malaysia, Singapore, Hong Kong, Bahrain, Dubai, and London are leading the global Islamic Investment fund initiative.  This short article aims to provide a brief overview of the different types of Shari’ah compliant asset classes available for investment and give a snapshot of the global Islamic funds industry as according to Noripah Kamso’s book.

Equity funds

The oldest equity fund, the Al Ahli Group Trading Equity Fund, was first offered in 1995 by the National Commercial Bank of Saudi Arabia and now has an AUM of approximately $255 million (2012). Equity funds hold a market share of 46.9% among available Islamic funds, which is the largest available asset class of globally available Islamic funds. This is due to the easy availability of broad Shari’ah indices offered by Dow Jones Islamic Markets, Standard & Poor’s, FTSE, MSCI, and Russell. Islamic equity funds are widely available from onshore funds to offshore funds registered in Luxembourg, Ireland, and the Cayman Islands.  Oasis Crescent Global Equity Fund is available on the Irish Funds Platform and has approximately AUM of 151.4 million (2012).  The majority of the top 20 Islamic funds are based in Pakistan, Malaysia, Thailand, and South Africa.

Sukuk funds

The first sukuk funds were established in Malaysia in 1990 and were Ringgit-denominated. Global sukuk funds invest in sukuk that are denominated in an international currency like the dollar or the euro.  These are available on offshore funds platforms. Ernst and Young has predicted that the global sukuk market may reach $900 billion by 2019.  A comparison of sukuk performance, represented by the HSBC/DFIX USD Sukuk Index versus traditional bonds, represented by the Barclay’s Capital Aggregate Bond Index, shows that the relative performance of sukuk against conventional bonds is comparable over the past few years. It is still not possible for investors to invest in a global sukuk fund that is Undertakings for Collective Investment in Transferable Securities (UCITS) – compliant.

Exchange-traded funds

As of 2011, there were 13 Islamic Exchange-Traded Funds or ETFs with total AUM of $382 million compared to the global total of conventional ETFs at $1.25 trillion.  The largest contributor is the Malaysian based MY ETF with $197 million.  These 13 ETFs are listed in stock exchanges in the UK, France, Turkey, Singapore, India, Malaysia and South Africa. They are invested in the equity asset class on a global (developed and emerging markets), regional (Europe), and single country (India, South Africa, Japan, and Malaysia) basis.  The first US Islamic ETFs were listed in 2008.

Islamic money market funds

Islamic money market funds are domestic-centric and only available in Malaysia and Saudi Arabia, i.e. Government Investment Certificates (GIC) issued by the Malaysian government. They comprise 22.2% of the assets under management of global Islamic funds.

Shari’ah compliant REITs

Shari’ah compliant real estate investment trusts, or REITs, invest in real estate securities that sell like stocks and also invest in real estate based on Shari’ah guidelines.  Examples include the Sabana Shari’ah Compliant Industrial Real Estate Investment Trust, which is Singapore’s first Islamic REIT, listed in 2010 (oversubscribed 2.5 times) and with $833 million in total assets (2011).  Another famous example of a successful Shari’ah compliant REIT includes the Emirate REIT of Dubai Islamic Bank. Emirates REIT invests in residential and commercial properties in Dubai and its asset size grew to $68.3 million in 2011.

Shari’ah compliant private equity

The purpose of private equity is to provide working capital to a target company to nurture expansion or new product development or to restructure the company’s operations, management, or ownership. Shari’ah private equity investing encourages direct ownership of real and productive businesses.  It follows certain guidelines regarding the permissibility of the business activities and means of financing.  Arcapita, a Bahrain-based private equity firm, acquired Caribou Coffee, one of the largest American specialty coffee chains through Islamic private equity. In addition, Investment Dar and Adeem Investment Company, Kuwait based companies, were involved in the acquisition of Ford’s Aston Martin based on Shari’ah compliant private equity participation.

Shari’ah compliant hedge funds

Hedge funds were created to hedge (manage) risks against potential losses of investments due to uncertainty in the market. The basic Shari’ah principles do not allow the sale of goods without legal ownership of those goods. Also, the principles do not allow leveraging positions that are found in the structure of the hedge funds. However, based on certain Islamic contracts, it may be possible to structure a Shari’ah compliant hedge fund. However, this is debatable.  Shari’ah Capital, a US based firm, emerged as one of the leading companies to provide technologies and advisory services to Islamic hedge funds. In 2008, Shari’ah Capital and Barclays Capital launched Al Safi Trust Platform for hedge funds, in which Shari’ah Capital provides advisory service and Barclays Capital is the prime broker and custodian.

Ijarah

Lease funds invest exclusively in lease obligations. The funds have a fixed tenure and regular income like bond funds, but have shorter maturities. Shari’ah based ijarah funds must meet certain requirements. The asset used for leasing must be permissible under Shari’ah guidelines. The rental must be fixed and known to both the parties at the time of entering into the contract. Furthermore, the fund must hold all the responsibility following its ownership of the asset. The Ijarah fund uses the subscription amounts to buy assets like properties, vehicles, and machinery for the purpose of leasing.  The fund owns the assets and the lessees pay the rentals. These rentals form the regular income streams for the fund. The first such aircraft leasing contract took place between Emirates Airlines and Al Rajhi Banking and Investment Corporation raising $60 million through Ijarah.  Emirates Airlines outperforms all other airlines in the world.

Conclusion

Islamic funds are outperforming conventional funds on all indexes although they represent a smaller percentage of the available funds in the market. The Dow Jones Islamic Market World Index, the Dow Jones Islamic Market Europe Index, the Dow Jones Islamic Market Japan Index, and the Dow Jones Sukuk Index are all outperforming their conventional counterparts. Saudi Arabia currently has the largest Islamic fund assets under management (AUM) in the world at $19.9 billion. A total of 26 Islamic UCITS in Luxembourg and Ireland were first made available to international investors on global fund platforms in 2000.  However, the majority of the funds were launched from 2008 onwards and with managers from non-Muslim countries. Shari’ah Compliant UCITS funds that currently exist on these platforms were established by conventional global asset managers from non-Islamic countries: the US, Germany, the UK, France, Australia and Switzerland. In fact, over half of the investors in Shari’ah compliant funds are non-Muslim. Shari’ah compliant investing is operated by and for anyone. Islamic funds are no longer just an alternative, but a source of competition for the conventional funds industry.

Camille Paldi is CEO of Franco-American Alliance for Islamic Finance

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In today’s fast-paced and dynamic market environment, SMEs undoubtedly play a vital role. Though the term needs no explanation, for the sake of clarity, Small and Medium-sized Enterprises (SMEs) are non-subsidiary, independent firms which employ anywhere between 50 and 250 employees (as per European Union). Small firms are generally those with fewer than 50 employees. The turnover of medium-sized enterprises (50-250 employees) is around €50 million and that of small enterprises (10-49 employees) around €10 million.

The definition of an SME is also relative to how developed the economy is and subject to local factors.

As an economy that has heavily depended on its oil sector, the Sultanate of Oman is now actively pursuing a development plan focusing on diversification, industrialisation and privatisation, with special attention being paid to encourage young Omanis to enter the workforce and contribute to its GDP. Growing and dynamic SMEs are essential to the growth and sustainability of any economy, as they provide a myriad of opportunities and value addition. A high-income economy like Oman, whose SME sector is still in its nascent stages, is yet to come to a stage where the SME sector is the primary contributor to the nation’s GDP. In Oman, the percentage of workforce employed in the SME sector is 40% and its contribution to the economy stands at about 15-20%.

In comparison, a World Bank survey of 47,745 businesses across 99 countries revealed that firms with between 5 and 250 employees accounted for 67% of the total permanent and full-time employment. The contribution of SMEs to economic fundamentals varies substantially across countries from 16% of GDP in low-income countries (where the sector is typically large but informal) to 51% of GDP in high-income countries.

This conference will not only showcase various best practices of economies such as the US and members of the EU, which benefit from significant contributions from their mature SME sector, but also initiate a dialogue on ways in which the Omani economy can bring about regulatory changes and incorporate some of these practices into their own system.

It is certain that given the right support, access to financing and infrastructure, this sector holds tremendous potential for growth and value addition to the Omani economy.

OSMES 2015

Features 36 speakers and 150 delegates

Showcases

# key regulatory developments

# product innovation & enhancements

# risk management

Will highlight myriad possibilities and prospects for the SME sector

Showcase options before the Omani economy and businesses to spur growth in SME sector

Confirmed speakers:

Guest of Honour: His Excellency Dr. Ali Saud Al Bemani Vice Chancellor Sultan Qaboos University (SQU)

Dr. Sana bint Sabeel Al Balushi Director General Career Guidance Centre at Ministry of Education

	Dr. Dalia Samra-Rothe Deputy CEO and Director AHK Abu Dhabi
	Chris Breeze Country Chairman Shell Development Oman

	William Crew CEO Inspired Solutions
	Sharifa Al Barami Executive Partner Al Jazeera Global

	Qais Al khonji CEO Genesis International
	Musallam Rashid Al Mandhari CEO OPAL

	Nasima Yahya Zirook Al-Balushi Director General of Export Development, Public Authority of Promotion and Export Development (Ithraa)
	Ali Hamdan Al Raisi Vice President Central Bank of Oman

	Paul Steele Director of Training AMIDEAST
	Raphael V. Parambi CEO SME Development Fund & National Company for Projects and Management

For further details regarding:

– Speaking Opportunities

– Sponsorship Opportunities

– Exhibiting Opportunities

– Delegate Registration

Please contact:

TELEPHONE

+44 (0) 207 1936 304

EMAIL

bdas@ifinancemag.com

WEB

www.ifinancemag.com

The post Oman SME Summit 2015: Opportunities galore appeared first on International Finance.

Kamilia Lahrichi

April 8, 2015: The Petrobras oil scandal, which sparked massive protests across Brazil against the government’s corruption and the economic slowdown, has cost $27.1 billion to the GDP of the world’s seventh largest economy, according to an April 2015 study released by Fundação Getúlio Vargas, a higher education institution in Brasília.

The organisation’s Environmental Solutions and Infrastructure Group found that Brazil lost over than 1% of its GDP — estimated at $2.2 trillion — as a consequence of this colossal corruption scandal.

Former employees of Petrobras, the national oil company, shed light on a kickback stratagem to inflate the value of projects and channel bribes from contractors into the pockets of political figures and to President Dilma Rousseff’s 2010 election campaign.

Mysterious payments amounted to $3.7 billion, according to the Brazilian police. The Supreme Court approved in March 2015 a probe into top political figures — mostly from the ruling Workers’ Party coalition — who are allegedly involved in the scheme.

Billions lost

Although Petrobras has not yet gauged the financial impact of the bribes, it is today the most indebted publicly traded oil company on the planet. It faces threats of default with $52 billion of bonds outstanding.

The state-run company has until the end of May 2015 to release its financial statements from last year’s third quarter.

The sweeping Petrobras scandal is dragging the country’s economy down, especially the construction, oil and gas industries, engineering and consumer spending.

Construction, in particular, is a key sector in a continent-size country lacking adequate infrastructure.

The Fundação Getúlio Vargas report assesses economic loss based on the company’s plans to reduce investments this year.

For example, the international ratings agency Fitch downgraded its ratings for the Brazilian construction companies Construtora Queiroz Galvão, Mendes Júnior Trading Galvão Participações, Engenharia and Galvão Engenharia. They are allegedly involved in the Petrobras bribery scheme.

Construtora OAS, one of the largest construction companies in Brazil, and Galvao, filed for bankruptcy.

Ultimately, construction workers are paying the price, according to the study’s estimates.

Petrobras “had to expand outside its core business – from infrastructure to shipbuilding, to chemical markets. As the nasty connections are now revealed and Petrobras moves away from these projects, several sectors and regions will experience losses,” says Glauco Oliveira, economist and policy analyst at Brazil’s Administrative Council for Economic Defense, a governmental agency that investigates economic power abuse, in Brasilia.

For instance, he refers to “dire prospects” for the shipbuilding industry with the fall of Petrobras’s demand. “Several municipalities, especially those that rely on royalties, are already experiencing difficulties,” explains Mr. Oliveira.

Notwithstanding Brazil’s enduring fight against impunity, the Petrobras saga is one of the biggest corruption scandals in the nation’s history.

“Corruption has been impacting the Brazilian economy deeply at all levels of the (local and regional) government,” says Guillermo Alborta, economist at the Inter-American Development Bank in Washington D.C.

“Taking into account that Petrobras represents about half of total investment for the economy, a large share of the BOPESVA index and [is] a large (almost unique) energy player for the Brazilian economy,” he explains.

Besides the urgent need to restore confidence among investors and the public, “lowered petroleum investments and challenging managerial reforms will cost them dear economic growth points,” said Alborta.

On the edge

Confidence is indeed lost. On March 15, 2015, almost a million Brazilians took to the streets across the country to voice their ire at rampant corruption, the inert economy and rising prices in Latin America’s largest economy. They also called for the impeachment of the left-wing president.

In reaction, the government vowed to tackle economic hardships and corruption. Yet, a wide majority of Brazilians disapprove of the narrowly re-elected president – as GDP contracted by 1.01% at the beginning of this year, according to a weekly central bank survey of 100 economists released in April 2015.

Demonstrations broke because the Brazilian economy has fared poorly and hurt the middle-class – although Brazil’s economy is doing better than its neighbour’s, namely Argentina.

Inflation has reached a 10-year high, according to Bloomberg, and 7.7% based on data from the national statistics agency, the Brazilian Institute of Geography and Statistics (IBGE), in February 2015. In both cases, it is the highest rate in a decade.

As oil and gas prices rose sharply and consumer confidence collapsed, Brazil’s Central Bank tried to rein in inflation by raising benchmark interest rate – the SELIC rate.

Meanwhile, the real dropped to a 10-year low. In February 2015, the local currency fell to the weakest level since September 2004 – 1.3% to 2.9 per US dollar.

In addition, IBGE estimated that the unemployment rate in January 2015 reached the highest level in a decade – 5.3%.

“The economic policies of the last years were incorrect and misconceived, provoking several distortions,” says Mr. Oliveira. “The excess of fiscal stimulus, such as tax breaks and subsidies for selected sectors, coupled with protectionist measures and populist energy price caps, misaligned relative prices and distorted economic signals, which are now being corrected.”

President Rousseff’s administration intervened heavily in the economy to expand infrastructure and social programs to end extreme poverty in a highly discriminatory society. Brazil’s budget deficit almost tripled during her first term.

The government introduced capital controls and developed loose monetary policies to keep prices low, which put Brazil at risk of an investment credit rating downgrade.

The country recently focused on exporting raw materials, thereby exposing the economy to market volatility. Last year, raw products amounted to half of all exports, according to 2014 data from the Brazilian Trade Balance.

In fact, its average growth exceeded 4% during the decade before President Rousseff took office in 2011.

Yet, the protectionist measures and widespread corruption of the Workers’ Party are not the only factors to blame: the vagaries of the commodities market sapped the vitality of the economy too.

On the other hand, the devaluation of the real has boosted the competitiveness of industrial goods, in particular. For instance, it benefitted non-commodity exporters, such as meat producers and exporters.

“To Petrobras, the devaluation might be good, since the company exports part of its production,” says Mr. Oliveira.

Endorsing austerity?

In the end, “Petrobras was chosen by the Workers’ Party’s governments to be the spearhead of a development model based on state intervention and investments, and commodities windfall. The demise of Petrobras might be the beginning of the end of that model,” says Mr. Oliveira.

In January 2015, President Rousseff appointed Joaquim Levy, a former banker in favour of orthodox economic policies, as Finance Minister to promote pro-market measures and get public spending under control.

He recently said that economic growth has worsened at the beginning of 2015 and stressed the need for austerity. He is trying to convince senators to implement radical fiscal adjustment measures, namely cuts in labour and pension benefits and to stop subsidising utility rates.

Also Read:

Brazil’s President Rousseff stays in power

FIFA World Cup fails to lift Brazil, shows apex bank data

The post Brazil takes a $27 billion hit appeared first on International Finance.