Sukuk glossary: 40 terms from AAOIFI to wakala, defined in one or two sentences each

A to G

AAOIFI. The Accounting and Auditing Organization for Islamic Financial Institutions, based in Bahrain. Publishes Shariah, accounting and governance standards. Shariah Standard 17 defines investment sukuk.

Agent (AI). Software that plans and executes multi-step tasks using tools, with limited human prompting between steps. See AI agents in Islamic finance.

Agentic sukuk. A descriptive term, not an official one, for a sukuk whose routine lifecycle tasks are executed by AI agents under limits set by scholars, regulators and a trustee, with humans signing at defined gates. None has been issued. See the home page.

Asset-backed sukuk. Holders truly own the underlying asset and could sell it if the originator fails. Rare.

Asset-based sukuk. Holders have a beneficial interest, but their practical protection is the originator's promise to buy the asset back. Most sukuk. See sukuk vs bonds.

Bay' al-dayn. Sale of debt. Permitted at face value; sale at a discount is treated as riba by most Gulf scholars, while Malaysian rulings have historically been more permissive. Determines whether murabaha sukuk can trade.

Distribution. The periodic payment to sukuk holders, from rent, profit or fees. Not interest, though often benchmarked to an interest rate for comparability.

Fatwa. A ruling on a question of Islamic law issued by a qualified scholar. Egypt's Dar al-Ifta has ruled that software may not be relied on to issue one.

Gate (human). In this site's reference design, a point in the sukuk lifecycle where a named human must sign before anything proceeds. There are five. See the lifecycle.

Gharar. Excessive uncertainty in a contract about what is sold, for how much or when. Invalidates a sale.

H to O

Hybrid sukuk. A sukuk whose asset pool mixes contracts, for example ijarah assets and murabaha receivables, kept above a minimum tangible share so the whole remains tradable. See types of sukuk.

IFSB. The Islamic Financial Services Board, based in Kuala Lumpur. Issues prudential standards for Islamic finance and an annual stability report with market statistics.

IIFM. The International Islamic Financial Market, based in Bahrain. Publishes the annual Sukuk Report, the reference source for market size. See sukuk market size.

Ijarah. A lease. The most common sukuk structure: holders own an asset and receive its rent. See what are sukuk.

Istisna. A contract to have something manufactured or built, paid in stages. Used to fund construction, after which the asset is usually leased.

Ledger (distributed). A shared record of ownership and transactions maintained across several computers rather than by one registrar. The infrastructure of tokenised sukuk.

Marja'. In the Ja'fari (Shia) school, a senior jurist whose rulings a layperson follows. Authority rests with the living scholar, not with any text or software.

MCP (Model Context Protocol). An open standard published by Anthropic in November 2024 that lets AI systems connect to tools and data through one interface. Relevant because it makes each agent action a logged tool call.

Mudaraba. A partnership where one side provides capital and the other provides work; profit is shared by ratio, financial loss falls on the capital. AAOIFI's 2008 resolution bars capital guarantees in mudaraba sukuk.

Murabaha. A sale at cost plus a disclosed mark-up, paid later. Murabaha sukuk represent a receivable and are generally not traded in Gulf practice.

Musharaka. A joint venture where all parties contribute capital and share profit by ratio and loss by capital share.

Originator. The company or government that needs funding and supplies the asset for a sukuk.

P to Z

Purchase undertaking. The originator's promise to buy the asset back at maturity or on default, at a stated price. Where your capital comes from, and the clause scholars and courts argue about most.

Purification. Giving away to charity any income found to be impermissible, for example rent received during a period when an asset was misused.

Riba. Interest, or more broadly any guaranteed return on a loan of money. Prohibited across all schools. The reason sukuk are structured as ownership rather than lending.

Sakk. Singular of sukuk: one certificate.

Salam. Advance payment for goods of specified quality delivered later. Salam sukuk represent a debt in goods and are not traded.

Shariah board. The scholars who approve a sukuk's structure before issue and, in good practice, monitor it during its life. Also called a Shariah supervisory board or committee. See are sukuk halal.

Shariah Advisory Council (SAC). Malaysia's central Shariah authority at Bank Negara Malaysia and the Securities Commission, whose rulings are binding on institutions under the Islamic Financial Services Act 2013.

Smart contract. Code on a distributed ledger that executes an action, such as a payment, when a condition is met. The mechanism by which a tokenised sukuk could pay holders automatically.

SPV (special purpose vehicle). A company created solely to hold a sukuk's asset on behalf of holders, keeping it separate from the originator's other liabilities. Usually the legal issuer.

Sukuk. Certificates of equal value representing undivided ownership in tangible assets, usufructs, services, or the assets of a specific project or investment. See what are sukuk.

Takaful. Islamic cooperative insurance. Takaful operators are major sukuk investors.

Tangibility ratio. The share of a sukuk's asset pool made up of tangible assets rather than receivables. Boards set a minimum, commonly a majority, for the certificates to remain tradable.

Tenor. The life of a sukuk from issue to maturity.

Tokenised sukuk. A sukuk whose certificates are recorded as digital tokens on a distributed ledger. See tokenised sukuk.

Trustee. The party that holds the sukuk's assets and rights on behalf of holders and enforces the documents.

Usufruct. The right to use and benefit from an asset without owning it outright, for example the right to occupy a building for a term. Can be the underlying of a sukuk.

Wakala. Agency. In wakala sukuk, holders appoint an agent to invest their funds in a pool of permissible assets for a fee. The structure used in Khazanah's April 2026 tokenised pilot.

Wakil. The agent in a wakala.