ISSBNT is based on the established framework of the SBLNT model. The key differences between SBLNT and ISSBNT are as follows:
SBLNT
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ISSBNT |
- Application of a ‘lending-borrowing’ concept.
- Mainly governed by Global Master Securities Lending Agreement (“GMSLA”) or Global Master Repurchase Agreement (“GMRA”).
- No requirement to observe Shariah principles pertaining to interest, risks and liabilities, charges, etc.
- List of eligible securities may consist of Shariah non-compliant securities.
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- Application of a trade, i.e. selling-buying concept consisting of two outright sale transactions.
- Governed by ISSBNT agreement and two unilateral promises or undertakings (wa’dan).
- Subject to validity of a trade contract from the Shariah perspective.
- A subset of the SBLNT list of eligible securities consisting of only Shariah-compliant securities published by the SAC (Shariah Advisory Council) of the Securities Commission.
- Only acceptable collaterals from a Shariah perspective.
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