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Information in this document is subject to change without notice.

No part of this document may be reproduced or transmitted in any form or by any means,
electronic or mechanical, for any purpose, without the express written permission of TEMENOS Holdings NV.

Copyright 2002-2003 TEMENOS Holdings NV. All rights reserved.

TEMENOS User Guide - Sukuk

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The Programs (which include both the software and documentation) contain
proprietary information of Temenos Holdings NV and they are provided under a
license agreement containing restrictions on use and disclosure and are also
protected by copyright and other intellectual and industrial property laws.

Reverse engineering, disassembly or de-compilation of the Programs, except to

the extent required to obtain interoperability with other independently created
software or as specified by law, is prohibited.

The information contained in this document is subject to change without notice.

If you find any problems in the documentation, please report them to us in writing.
Temenos does not warrant that this document is error-free.

Except as may be expressly permitted in your license agreement for these

Programs, no part of these Programs may be reproduced or transmitted in any
form or by any means, electronic or mechanical, for any purpose, without the
express written permission of Temenos Holdings NV.

T24 and jBASE are registered trademarks of Temenos Holdings NV. Other names
may be trademarks of their respective owners.

TEMENOS Confidential Page 2 of 31

TEMENOS User Guide - Sukuk

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Item Detail

PRODUCT NAME SUKUK

DOCUMENT TYPE User Guide

CONTACT BACK TO gpack@temenos.com

SPECIAL COMMENTS (1) If Field Information is Crossed Out, it

implies that the field is Not used under
the current version of the Development.

( Document Specific )
SPECIAL COMMENTS (2)

(Development / Support) Specific

SPECIAL COMMENTS (3)

(Client Specific)

TEMENOS Confidential Page 3 of 31

TEMENOS User Guide - Sukuk

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Serial No Last Updated Doc Version Author Comments

1.0 02.07.2006 Version 1 Liril Thomas New
1.2 18.11.2007 Version 2 Jayadeva Vijay Updates with
Kumar Browser Release

TEMENOS Confidential Page 4 of 31

TEMENOS User Guide - Sukuk

Table of Contents
Overview of this guide........................................................................................................................ 6
Assumptions ................................................................................................................................... 6
Document Support ......................................................................................................................... 6
Scope of this guide ......................................................................................................................... 6
Introduction ........................................................................................................................................ 7
Document Purpose......................................................................................................................... 8
TEMENOS T24 TM Modules Supported.......................................................................................... 8
Multi Threading Supported ............................................................................................................. 8
Abbreviations used in this Guide.................................................................................................... 8
Sukuk Work Flow ............................................................................................................................... 9
Process Flow ................................................................................................................................... 11
Sukuk PROCESSING .................................................................................................................. 11
Sukuk Issue Details ......................................................................................................................... 12
Setting up of Customer Security ...................................................................................................... 16
Setting up Portfolio for Customer ..................................................................................................... 17
Setting up Portfolio for Own Book ................................................................................................ 18
Subscription/Trading in Sukuk ..................................................................................................... 19
Transfer of sukuk Subscription ..................................................................................................... 22
Murabaha Sukuk .......................................................................................................................... 23
Sukuk Profit Distribution ............................................................................................................... 24
Accounting Entries .................................................................................................................... 24
Sukuk Details Amendment ........................................................................................................... 25
ENQUIRIES ..................................................................................................................................... 27
Basic Set Up Tables ........................................................................................................................ 29
Accounting Entries ........................................................................................................................... 31

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TEMENOS User Guide - Sukuk

Overview of this guide

The purpose of this guide is to help the user to understand the various templates and the fields in
the templates and the crucial setup of any PARAMETER Files in the SUKUK Islamic Product.

Assumptions
It is assumed that the reader of this guide has knowledge of the following.

 Fair knowledge in TEMENOS T24 TM

 Basic knowledge in SECURITIES module

If any of the above assumptions are not met, then get back to the Project Manager
Onsite for HELP.

Document Support
Any queries in any part of this document can be addressed to gpack@temenos.com. Refer to the
Contact Back To address in the Document Detail pane on Page 3 of this Guide for support.

Scope of this guide

User Reference information of this particular development is the only scope of this guide.

Installation, Customization Procedures, Release Information, Guidelines for testing,

Operation and Migration procedures are NOT under the scope of this Document

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TEMENOS User Guide - Sukuk

Introduction
Sukuk are "securities", as in marketable securities. In practice most have so far been similar to
bonds or Mortgage backed securities "MBS", mostly floating rate based (although there have been
fixed-rate issues also). Just as securities could be of an equity profile or fixed-income or hybrid,
Sukuk may also have similar profiles.
In terms of product offering, the Bank could assume one or more of the following roles - (i) Bank
acts as Book Runner to Sukuk Issued by another Issuer; (ii) Accept subscription from Customer for
its own issue; (iii) Bank investing in Sukuk for its own book portfolio; (iv) Issuer of Sukuk for itself;
and, (v) Secondary market operations for own book portfolio and / or its Customer.

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TEMENOS User Guide - Sukuk

Document Purpose
This document provides information to the user to understand the different parameter files and
their setup. This document provides detailed information about every Field of all the Files used in
the SUKUK Islamic Product

TEMENOS T24 TM Modules Supported

The following Files in the Following Modules are Supported and Used by this Sukuk Islamic
Product.

 SECURITIES

Multi Threading Supported

Multi threading supported. The following routine is multithreaded in Sukuk.
 IS.SUK.POPULATE.MVMT

Abbreviations used in this Guide

S – Single Value Field
M – Multi Value Field
AMS – Associated Multi Value Starts Here
AM – Member of Associated Multi Value
AMC – Associated Multi Value Closes Here

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 TEMENOS User Guide - Sukuk

Sukuk Work Flow

As each of the above-said Sukuk activities requires a distinct workflow, the requirement for each of
the activity is captured under a separate heading.

1. Bank acts as Book Runner or Co-Manager to Issue

 An agreement has been signed between the Issuer and Bank as to the functions and
responsibilities of each of the parties in Organising and Managing the Sukuk Issue
 The issue will follow the procedure laid down in the offer document which is given to
each of the participants in the issues process like the Book Runner, Co-Manager,
Investor etc
 During the period of Issue the Bank will collect the proceeds from the Investors and at
the closure of Issue period will allot the Sukuk Certificates as per terms of Offer
 Bank will transfer the Issue proceeds to the Issuer and if any, back to the Investor(s)
 The issuer may choose to invest the proceeds of the Issue through the Bank, in Asset
products offered by the Bank. Though this activity is not in the scope of Book Runner role,
this will be an extended service provided by the Bank
 In such a case, the Bank will tag the Issue amount to the Assets and track the
performance of these Assets

2. Bank accepts subscription from Customer

 Bank's customer may take part in a Sukuk issued / managed by a third party and pays his
subscription through the Bank. In this case, the customer's notifies the Debit and Credit
Account details. Importantly, the Customer's investment will not be reflected in the books
of the Bank, but is kept track of. Bank takes delivery of securities on behalf of customer
(safekeeping/custody services). In case of custody service, bank collects
dividends/coupons on behalf of the customer and deposit into his a/c. This service will be
provided, if the issuer of Sukuk pays the proceeds through the Bank.

3. Bank invests for own book portfolio

 Bank may, as part of its investment strategy, subscribe to a Sukuk - (a) managed by the
Bank; and, (b) issued / managed by a third party. In this case details of Sukuk
investment(s) under own book portfolio is required to be recorded and kept track of.

 Bank's investment also has a bearing on its Capital adequacy and risk profile. These need
to be catered to by way of reports.
4. Bank as Issuer of Sukuk
 Bank may, as part of its financing strategy, issue Sukuk. Bank may use Special Purpose
Company/ Vehicle for issue of Sukuk.
 The Sukuk may be Guaranteed (partially or fully) or non-Guaranteed.
 The Bank collects the proceeds from the Issue during the Issue period. It then allots the
Sukuk based on the terms of Offer.

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TEMENOS User Guide - Sukuk

 Necessary checks to be in place to ensure that the proceeds of the Sukuk issue are
utilised for the stated purpose. For example, a Murabaha Sukuk may be issued, and
proceeds must be utilized in a Murabaha according to the terms of the sukuk, and in
case of ijara sukuk as another example, proceeds to be utilised for ijara, and the
resultant cash flows (rents or guaranteed amount if any) to go to the sukuk holders
through the system. The returns vis-à-vis the offered rate on the Sukuk issue proceeds
is kept track of. Returns above a threshold rate may be shared with Manager through a
performance incentive scheme (parameterise via system). Incentive in this case must
be booked as an income to the bank. The link between sukuk and funds utilization must
be an option (enable or disable)

 The Sukuk liability will be extinguished on maturity or exercise of call option, as

applicable.

5. Bank performing secondary market operations

 Bank may, as part of its investment strategy, invest in Sukuk in the secondary market for
its own book portfolio.
 Bank will perform secondary market investment in Sukuk for its Customers. In this
instance, the Customer will provide the Debit and Credit Account details. The investment
will not be reflected in the books of the Bank, but will show in the Customer's portfolio.
 The Bank may charge a fee for the services offered.

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TEMENOS User Guide - Sukuk

Process Flow
Sukuk PROCESSING
The following screenshot shows the menu for all processes concerning a sukuk contract:
Use the menu Finance Sukuk for the Sukuk Processing

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TEMENOS User Guide - Sukuk

Sukuk Issue Details

The first stage in Sukuk Processing is to define the Sukuk Issue in the system. Use Sukuk
Operations from the menu under Finance Sukuk. Pressing ' New Deal Button' will
automatically generate a Security.Master ID(SM) for the contract.
The details of the Sukuk will be captured in a series of three screens. A screenshot of entry screen
(Sukuk Info) where basic details of the Sukuk will be captured is as shown below:

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TEMENOS User Guide - Sukuk

Issuer Name: Name of the Issuer of Sukuk

Sukuk Desc: Sukuk Description
Short Name: Short Name for Issuer for Reports/Enrichment
Sukuk ID: Memory aid to recall the Sukuk Id
Issuer Country: The country in which the Issuer is located
Sukuk Country: Country in which the Sukuk is issued
Sukuk Currency: Currency of the Issue
Industry: Industry the Sukuk belongs to
Issue Date: Date on which the Sukuk is issued
Maturity Date: Date on which the Sukuk matures
Listed: Whether quoted on the Stock Exchange
Convertible Bond: Whether Sukuk is convertible
Guaranteed: Whether Sukuk is guaranteed

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TEMENOS User Guide - Sukuk

 A screenshot of second screen where price details (Price-Profit Info) of the Sukuk will be
captured is as shown below:

Price Currency: Currency in which Sukuk is traded

Price Type: Calculation type to be used when Sukuk is traded
Listed Stock Exch: Stock Exchange in which the Sukuk is traded
Profit Tax Code: Tax Code, if Sukuk is a taxable instrument
Profit Start Date: Value Date for Coupon
Profit Pay Date: Due Date for Coupon
Proft Rate: Rate that the Coupon carries

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TEMENOS User Guide - Sukuk

 A screenshot of third screen where other details (Other Info) of the Sukuk will be captured is
as shown below:

Sukuk Type: This field will provide an option to choose the applicable Sukuk type. Based on the
Sukuk type, validation will take place during input in the respective application when the proceeds
of this Sukuk are invested in Ijara, Murabaha, etc. as the case may be.
Sukuk Open Date: Date from which Sukuk is open for subscription
Sukuk Close Date: Date when Sukuk issue is closed for subscription
Sukuk Final Account: Proceeds of Sukuk, issued other than by Bank, will be transferred to this
Account on Closure of Issue
Book Runner: Name of the book runners
Sukuk Guarantor: Name of the Guarantor(s) of Sukuk
Sukuk Promoters: Name of the major promoters
Sukuk Renewal Date: Date on which the Sukuk is renewed or re-issued
Sukuk Issue Amount: Amount to be raised under the Sukuk

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TEMENOS User Guide - Sukuk

Setting up of Customer Security

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TEMENOS User Guide - Sukuk

Setting up Portfolio for Customer

In order for the customer to subscribe to Sukuk issue and later, to trade in Sukuk, portfolio is
required to be set up in the System for that Customer. Use the option ‘Setting up Portfolio for
Customer’ under Sukuk Operations.
The first screen (Portfolio Details) will be used for setting up the Portfolio. Screenshot is as given
under:

Portfolio Name: Name for the portfolio

Sukuk Account: Account No. to be used in Sukuk transactions

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TEMENOS User Guide - Sukuk

Setting up Portfolio for Own Book

In addition to the above step, it is required to be set up ‘Own Book’ Portfolio in the System. Use
the option ‘Setting up Portfolio for Own Book’ under Sukuk Operations. A sample screen shot is
given below:

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TEMENOS User Guide - Sukuk

Subscription/Trading in Sukuk
Having set up the Sukuk instrument details and the portfolio for the Customer, the system is tuned
for accepting subscriptions. The subscription details are captured in three screens. Screenshot of
the first screen which captures the details of trade is as given under:

SUKUK ID: Id of the Sukuk

Depository: Id of the depository
Trade Date: Date on which the Subscription is to be made
Value Date: Value Date of Subscription

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TEMENOS User Guide - Sukuk

 Screen shot of the second screen where details of the Customer side of the Subscription
is input is as given under

Customer: Customer or Bank buying or selling the Sukuk

Trans Type: Input the relevant code for buy or sell
Portfolio: Trade will be affected to this portfolio
Quantity: Will be default by system as '1'
Unit Price: Value of Subscription

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TEMENOS User Guide - Sukuk

 Screen shot of the third screen where details of the Issuer or Counterparty side of the
subscription is input is as given under:

Broker: Issuer of the Sukuk

Broker Account: Account to be credited with subscription amount

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TEMENOS User Guide - Sukuk

Transfer of sukuk Subscription

During the course of the subscription period, the sukuk issued other than the bank, will be credited
to the banks internal account and when the issue is finally closed the proceeds of sukuk will be
transferred to the issuer's final account. For that purpose Transfer of Sukuk Subscription option
needs to be chosen to transfer the amount to the issuer's account. A sample screenshot is given
below:

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TEMENOS User Guide - Sukuk

Murabaha Sukuk

If a Sukuk has been raised to fund Murabaha, then choose the option Murabha Sukuk and link
the corresponding sukuk id to Murabaha Contract. A sample screen shot is given below:
A Murabaha Sukuk may be issued, and proceeds must be utilized in a Murabaha according to the
terms of the sukuk, and in case of ijara sukuk as another example, proceeds to be utilised for ijara,
and the resultant cash flows (rents or guaranteed amount if any) to go to the sukuk holders
through the system. The returns vis-à-vis the offered rate on the Sukuk issue proceeds is kept
track of. Returns above a threshold rate may be shared with Manager through a performance
incentive scheme (parameterised via system). Incentive in this case must be booked as an
income to the bank.

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TEMENOS User Guide - Sukuk

Sukuk Profit Distribution

Profits Accrued on the Murabaha Finance contracts that are linked to the Sukuk Issued will be
distributed using the following formula to the customers holding position in the Sukuk.

Total Sukuk Nominal = Sukuk Issue Amount / Sukuk Unit Price

Sukuk Profit Distribution Rate = Total Profit Accrued / Total Sukuk Nominal
Customer Profit = Number of Sukuk Held by Customer * Sukuk Profit Distribution Rate / 100

Accounting Entries

Following entries are raised on Sukuk Profit Distribution:

DR Sukuk Issuer Account

CR Customer Account

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TEMENOS User Guide - Sukuk

Sukuk Maintenance
Following online functions are also available for dealing in Sukuk after input and authorisation of
the subscription.
 Sukuk Details Amendment
 Customer Portfolio Amendment
 Own Book Portfolio Amendment
 Input/Modify Customer Coupon/Dividend Details
 Input/Modify Customer Redemption Details
 Input/Modify Customer Entitlement Records

Sukuk Details Amendment

This function will allow to user to amend the profit rate and payment date. Other static data relating
to the Sukuk may also be amended. A screen shot is given below:

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TEMENOS User Guide - Sukuk
Following table describes the functions and usage available under Sukuk Maintenance
Function
Sukuk - Modification to terms (Security Master)
Customer Sukuk Portfolio (Sec Acc Master)
Own Book Sukuk Portfolio (Sec Acc Master)
Corporate Actions (Diary Type)
Entitlements
Coupons, Redemptions- Customer
TEMENOS Confidential
Description
 This function will allow to user to amend
the profit rate and payment date
 Other static data relating to the Sukuk
may also be amended.
 Input of Call option
 Modify details of the Portfolio
 Modify details of the Portfolio
 Modify settings of the various Corporate
actions like Profit payment,
Redemption, Call
 When a Corporate Action is initiated
using Diary application, entitlements for
every Sukuk holder is created in
unauthorised status ('IHLD' status).
Modification to the entitlement may be
made on customer basis
 When a Corporate Action is initiated
using Div Coup Det or Redemption Det
application, coupon is created for every
Sukuk holder is created in unauthorised
status ('IHLD' status). Modification to
the coupon may be made on customer
basis
Page 26 of 31
TEMENOS User Guide - Sukuk

ENQUIRIES
 Sukuk Holdings of Customer

Sukuk holdings of a Customer is produced by this enquiry

The Customer ID has to be input as a selection criterion, as shown in the following screen shot
The enquiry output is given below:

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TEMENOS User Guide - Sukuk

 Sukuk Position by Issuer

The number of Sukuk per Issuer, where the Bank acts as pre-issue and / or post issue manager, is
obtained through this enquiry
The Security Number has to be input as a selection criterion, as shown in the following screen shot
The enquiry output is given below:

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TEMENOS User Guide - Sukuk

Basic Set Up Tables

The tables mentioned below are set-up that is used in Sukuk implementation. Choose the option
‘Sukuk Basic Table Setup’ from the menu under Sukuk to view these tables.

Table Name Description

SC.PARAMETER System Parameter Table for Securities
module. Facility to set-up this table per
'company' is provided
SC.STD.SEC.TRADE System Parameter Table that governs
the Trading. Facility to set-up this table
per 'company' is provided
TRANSACTION Transaction Codes specifically required
for Sukuk is defined in this System
table where codes for other
transactions also co-exist. Transaction
Code enables the system to pass
Credit and Debit entries.
CATEGORY Categories specifically required for
Sukuk is defined in this System table
where Categories for other products
also co-exist. Category enables the
system to reflect the balances and
group necessary items in the GL or PL.
DIARY.TYPE The Corporate Actions relating to
Sukuk are defined here with their
characteristics.
SC.TRANS.NAME User defined name for identifying
Sukuk related trading
SC.TRANS.TYPE Unique reference code for identifying
Sukuk related trading transactions
ASSET.TYPE User defined name for identifying
Sukuk related trading
SUB.ASSET.TYPE Unique reference code for identifying
Sukuk related trading transactions
SC.INDUSTRY Industry to which the Sukuk belongs
SC.RATING Definition of Credit Rating types
PRICE.TYPE This table indicates to the system how
a "Price Type" calculation is to be
performed within any given transaction
in the securities module.

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TEMENOS User Guide - Sukuk

STOCK.EXCHANGE The Stock Exchange where the Sukuk

is listed. In case of unlisted Sukuk, they
should be configured on a dummy
Stock Exchange
SC.RATING Definition of Credit Rating types
PRICE.SOURCE The table is for defining how the price
feed will be to T24. For Sukuk, the
price source is Manual
SC.STD.COUPON This table contains system level default
settings for processing Profit payments
DIV.COUP.TYPE This table contains parameter setting
for Profit payment
REDEMPTION.TYPE This table contains settings for Sukuk
redemption or call option
CUSTOMER.SECURITY Any Customer should be defined in this
table only then the System will enable
Sukuk related transaction processing
for the Customer in T24

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TEMENOS User Guide - Sukuk

Accounting Entries

Action Accounting Entries Entry type

Customer - DR CUSTOMER ACCOUNT Online
Buy Subscription
CR ISSUER ACCOUNT (or) SELLER ACCOUNT
-
DR BUYER ACCOUNT
Sell
CR CUSTOMER ACCOUNT
Own Book - DR LIVE DEBIT – CATEGORY Online
Buy
CR ISSUER ACCOUNT (or) SELLER ACCOUNT
DR SELLER ACCOUNT
-
CR LIVE DEBIT - CATEGORY
Sell
Coupon Payment to DR ISSUER ACCOUNT Online
- Customer Coupon
CR CUSTOMER ACCOUNT

Payment to - Own
DR ISSUER ACCOUNT
Book
CR OWN BOOK ACCOUNT (event may be
periodic or whenever required)
Redemption or Call DR ISSUER ACCOUNT Online
Option - Customer
CR CUSTOMER ACCOUNT
DR ISSUER ACCOUNT
Redemption or Call
CR ISSUER ACCOUNT
Option - Own Book
Daily Profit DR Sukuk Profit Receivable COB
Amortization (Own
CR Sukuk Accrual
Book)

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