Market Structure and Classifications

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A market dealing with short-term debt instruments with a maturity of less than a year. These instruments are typically highly liquid and used for managing short-term cash needs.

A type of mutual fund that invests in highly liquid, short-term debt instruments, such as commercial paper. They are considered low-risk due to their high liquidity.

The central bank's daily actions to control the amount of money available in the banking system.

The rate at which banks lend money to each other, often used as a benchmark for other interest rates.

A market where long-term debt and equity securities are traded, involving both borrowing and lending for periods longer than a year.

Securities representing ownership in a company, giving holders a share in its profits and voting rights.

Securities representing debt owed by a borrower to a lender, typically with fixed interest payments and a defined maturity date.

The market where newly issued securities are sold for the first time, directly from the issuer to investors.

A method used by Islamic banks to manage liquidity in a surplus environment by placing excess funds with a central bank or other financial institution.

A program that uses commodity-based contracts, primarily crude palm oil, to manage liquidity through commodity trading platforms like Bursa Suq Al Sila'.

The Islamic equivalent of an equity market, allowing investors to transfer funds from surplus to deficit units. Enables investments based on risk tolerance, returns, and investment timeframe.

Shares traded on Bursa Malaysia's Main Board, Second Board, and MESDAQ market that comply with Islamic financial regulations.

Any Islamic equity product must adhere to the requirements of Islamic finance, ensuring they are Shariah-compliant.

A market where newly issued securities are sold for the first time, directly from the issuing company to investors.

A market where previously issued securities are bought and sold between investors, without the involvement of the issuing company.

A market designed for established companies that have met certain quality, size, and operational standards. They need to demonstrate a minimum profit track record or market capitalization.

A market for companies with good growth potential. This market is sponsor-driven and requires sponsors to assess the suitability of the companies based on factors like business prospects and internal controls.

The initial public offering (IPO) is the process where a private company first sells shares of its stock to the public.

This refers to the underlying instrument that is free from any forbidden activities in Islam, ensuring compliance with Islamic principles.

This involves structuring Islamic equity products according to the principles and contracts of Islamic law (Shariah).

These are the primary and secondary markets where shares, debentures, and other securities are traded.

An agreement to buy or sell an asset at a specific future date and price, where the price of the underlying asset is paid upfront. This contract is often used to hedge against price fluctuations.

A standardized contract, traded on an exchange, to buy or sell a specific underlying asset at a predetermined future date and price. Settlement happens at the agreed upon time.

A financial instrument granting the right, but not the obligation, to buy or sell an underlying asset at a certain price on or before a specific date. It is essentially like an insurance policy against unfavorable price changes.

An agreement between two parties to exchange cash flows based on a specific underlying asset or interest rate. It's like a swap of obligations or liabilities.

The main purpose behind using derivative instruments, such as forward contracts, futures, options, and swaps, is to reduce risk and manage price fluctuations in the underlying asset. These instruments provide a way to manage potential losses.

The value of derivative contracts is directly derived from the price movements of the underlying asset. For example, the value of a wheat futures contract depends on the price of wheat.

These contracts provide producers and manufacturers the ability to manage risk and protect their profits. For example, a farmer can use a futures contract to lock in a price for their crop, ensuring a stable income.

Derivative instruments are a crucial tool used in modern financial markets to manage risk, speculate on future prices, and take advantage of time-sensitive opportunities. Understanding how they work is essential for navigating complex financial markets.