Gulf Cooperation Council (GCC)

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Gulf Cooperation Council (GCC)

  1. 1. <ul><li>PROJECT PRESENTED BYMANMEET THAPARVISHRUTHA MARAARAARTI GADADEEPAVALI VANKALURAMMANI GUPTA SIDDHESH PARAB </li></li></ul><li>Gulf Corporation Council<br />
  2. 2. Gulf Cooperation Council<br /> GCC was established in an agreement concluded on <br /> 25 May 1981 in Riyadh, Saudi Arabia between:<br /><ul><li>Bahrain,
  3. 3. Kuwait,
  4. 4. Oman,
  5. 5. Qatar,
  6. 6. Saudi Arabia,
  7. 7. UAE</li></li></ul><li>Objectives<br /><ul><li>To protect themselves from the threat posed by the Iran-Iraq War
  8. 8. It was established with the political systems based on Islamic beliefs, joint destiny and common objectives.
  9. 9. The geographic proximity of the these countries and their general adoption of free trade economic policies are factors that encouraged them to establish the GCC. </li></li></ul><li>REVENUE SOURCES<br />OIL & GAS RESERVE<br />GOLD & MINING INDUSTRY<br />TRAVEL & TORISIM INDUSTRY<br />REAL ESTATE<br />
  10. 10. Member Countries Contribution<br />
  11. 11. DOES OIL ECONOMIES NEED <br />SYNTHETIC PRODUCTS?<br />
  12. 12. Capital Market Structure<br />
  13. 13. Present Scenario of Capital Market in GCC<br />
  14. 14. EQUITYMARKET<br />
  15. 15. EQUITYSTOCKEXCHANGES<br />
  16. 16. PRESENT DERIVATIVE MARKET<br /><ul><li>UAE (Dubai initiated by NASDAQ)
  17. 17. Kuwait</li></li></ul><li>Current scenario of Derivatives Market<br />"Markaz" initiated a proposal to provide the Options service in Kuwait Stock Exchange in year 2002. <br />Trades in options through a Fund viz., "Forsa Fund" to work as a market maker for options trading in the first stage. <br />In March 2005, KSE allowed Call options to be traded by Forsa Fund. <br />Put Options does not exist in GCC as of now.<br />
  18. 18. Forsa Option :<br /><ul><li>Should be a Member in KSE.
  19. 19. Contract –Market Maker(Forsa Fund ) & Buyer (Trader).
  20. 20. To achieve stable return.
  21. 21. Provides with a ask and bid price.</li></li></ul><li>Mechanism of an Option-3 way settlement.<br /><ul><li>He can sell the contract back to the buyer (Forsa fund).
  22. 22. Trading has to be done with the same broker who executed the original deal.
  23. 23. Take no action let the option expire.</li></li></ul><li>Brokerage and Commission Charges<br />They are charged to both the buyer and the market maker.<br />Total brokerage charged is 5.5% of the contract value.<br />
  24. 24. Forwards/Future ContractIn Dubai Market <br />Premium + 40% of the underlying stock value<br />Market Maker <br />Buyer<br />X<br />Gives the share <br />to KSE<br />KSE<br />If there is loss & the buyer refuses to pay<br />the 60% then the shares go back<br /> to the market maker.<br />
  25. 25. Futures<br />Similar to Forward Contracts<br />The basic difference is Forwards are traded after market hours (i.e. 12:45 to 1:15) while Futures are traded during market hours(i.e. 9:30 to 12:15)<br />
  26. 26. Forward Contract In Indian Market<br />Long Position <br />Short Position<br />Buyer <br />Mr. X<br />Seller<br />Mr. Y<br />Exchange an Asset<br />In Future @ Today’s Pre-agreed price at a particular period.<br />If there is a loss of seller, he can cancel the agreement & Vice Versa. Hence, there is no obligation in this particular contract .<br />
  27. 27. Limitations of GCC Capital Market<br />
  28. 28. IslamicFinance<br /><ul><li>Usury or charging of interest (riba) is forbidden)</li></ul> <br /><ul><li>Risk should be shared 
  29. 29. Uncertainty (gharar) in a contract is prohibited 
  30. 30. Competence 
  31. 31. Consent </li></li></ul><li>Suggestions/Lessons From Indian Derivative Market<br /><ul><li>Introduction of Short selling option.
  32. 32. More number of Participants from Institutional Investor.
  33. 33. Draft Regulatory Frame work.
  34. 34. Length and Depth of capital market.
  35. 35. Reduce the brokerage, clearing & settlement fees .
  36. 36. Expanding the number of market maker .</li></li></ul><li>Conclusion<br />Yes, Oil Economies need Synthetic Product<br />Within the scope of Shariyat Laws Islamic Scholars should find ways to invest in Derivatives Market. <br />
  37. 37. THANK YOU <br />

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