Where there is a price movement of underlying securities based on mark-to-market valuation, the promisor (buyer/seller) shall transfer some cash to the counterparty as securities deposit, to secure commitment to perform second leg transaction at maturity.
Specified two mechanisms for profit disbursement - profit reinvestment, profit transfer.
Upon triggering event for substitution of asset, the SBBA contracting parties agree to accelerate the execution of the second leg transaction of SBBA before maturity date.
They will then enter into new contract based on old maturity date to replace contract.
This SAC ruling is only applicable to the structure and Shariah contract stated.
Any proposal to implement new features of SBBA using structure and Shariah contracts other than stated in this SAC ruling must obtain prior approval of the SAC.
Effectiveness
This ruling will come into effect on Jun. 30, 2025.
