Benefits to Underwriter

Underwriters can deal in simple standard contracts. Such contracts may have lower costs than current customized fixed income contracts.

Certificates increase the universe of issuers and investors:

• May open the capital markets to issuers and investors bound by Shari'ah law
• Firms with opaque income statements: insurance companies, professional firms, etc.

The introduction of Sales Certificates provides the potential for an immediate and substantial refinancing activity.

During their lives, Sales Certificates move from being an equity-like vehicle to being like a money-market instrument. This implies non-information based trading and liquidity.

Third parties can issue Certificates as synthetic instruments.

Sales Certificates are a complementary security and do not supplant equity. However, the existence of Sales Certificates may change the value of equities. Once Sales Certificates issue, the incentives of the equity holder are better aligned with the Sales Certificate holder than those of the debt holder. The latter impose covenants in the debt indenture (trust deed) that, in the interest of maintaining debt coverage, limit the equity holders ability to increase sales. Sales Certificates are hybrid securities that both provide debt markets with competition and can be viewed as self-liquidating equity.