Tuesday, February 06, 2007

The challenge of a financial product with religious dimension

I've heard a bit about sukuk in the past but I haven't kept up with it. Interesting concept. Sounds like preferred stock to me. Maybe I'm oversimplifying a bit, but structured like a bond except for the interest payment (which is disallowed under Islam). Instead, the company pays out profits.

Riiiiiiight. A preferred.

Better position in the capital structure, some guaranteed yield, but a preferred it is. No matter, as long as it works.

However, what struck me the MOST was this quote from the trader profiled in the article, Chris Steer:

"It's quite simple really. What people don't know, they either don't like or mistrust. The more you find out about something, the more you understand it. It makes you more sympathetic to other religions and cultures."

I love it! Financial engineering actually uniting people, for once? Could it be, really??? Who'd have thunk!?!?

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