Sukuk, a kind of hybrid Securities

Islamic securities (‘sukuk’) are securities which have the features of stocks and bonds toghater. Similar to stocks, these securities indicate a type of partnership. However, these securities usually bear a maturity date like bonds and contrary to stocks. This has resulted in sukuk (Islamic securities) to be considered as a type of hybrid securities. Hybrid security is a term used to describe a security that combines elements of debt and equity securities or bonds and shares. Preferred shares, convertible bonds and subordinated bonds are common kinds of hybrid securities. The idea to create these securities is to design a type of security that can be considered share for some purposes and be considered bond for others through which we can gather best of the two different kinds of securities in one security. In this paper we have introduced hybrid securities, have explained sukuk’s similarities with stocks and bonds and finally have introduced sukuk as a kind of hybrid securities that also can broadly be used in the non-Islamic markets.