Islamic SILX is a Shariah-compliant and principal-protected structured investment product primarily based on the Islamic concepts of Musawamah, Wa’d, Commodity Murabahah, Ibra’, and Wakalah that delivers principal protection and returns.

Key Features

This structured product to be offered to Retail and Wholesale Investors with the following features:

  • Its investment principal is 100% capital protection if held until maturity (up to 10 years);
  • Its returns (known as coupon/profit) is based on Undertaking to enter into Commodity Murabahah (CM) Options payoff which benchmark against a Reference Index level, without any actual buy and sell of index’s units or shares;
  • Upon exercise of the Undertaking to enter into CM (option), the profit / coupon received by investor is not fixed and will be based on reference index movement above the strike point. If the Undertaking to enter into CM (option) is not exercised, investor will receive either zero profit or Minimum profit subjected terms and conditions agreed upfront;
  • The Reference Index will be based on list of reference indices approved by the Shariah Committee RHB Islamic Bank Berhad.

This product will provide investors access to global multi-asset classes and investment strategies tied to the underlying performance of a reference index, with a maturity of between three to ten years.

Through the product, institutional investors can benefit from portfolio diversification which includes proprietary multi-asset indices with Environmental, Social, and Governance considerations, foreign exchange, commodities, and other global indices, in addition to traditional cash assets such as equities and fixed income.

Single or series of Undertaking to enter into CM (Options) benchmark against reference index level. The Islamic SILX returns are derived from amount received from Undertaking to enter into CM (options). The Undertaking to enter into CM (options) will provide returns via referencing the index’s level on expiry date of the Undertaking to enter into CM (options) based on the following payoff conditions:

  • If index’s level is above the Strike Point (determined upfront), the Undertaking to enter into CM (option) will be exercised and profit will be paid by RHB Islamic Bank (RHBIB) to investor as a profit. The profit amount received by investor will be based on formula agreed upfront.
  • If index’s level is below the Strike Point, the Undertaking to enter into CM (option) will not be exercised and no settlement between RHBIB and investor. The investor will either receive Minimum Profit payment or zero profit depending on terms and conditions agreed upfront.

Product Suitability

This product may be suitable for clients who:

  • are looking to gain profit against reference index,
  • understand the risks associated with this product and are comfortable to bear the risks;
  • have a view on the movements of reference index;
  • are able to hold the contract to maturity.

Product Structure

Product Structure

Product Documentations

Product Documentations

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Product Structure

Islamic SILX can be structured as the following example:

Currency MYR
Principal / Notional Amount MYR 100,000.00
Tenor 24 Months
Underlying Index [Example Bank Of America FX & Commodities Alpha Basket]
Coupon (N)
Minimum Coupon 0%
Strike Point 100%, being the initial reference level of the Index
Participation Rate 120%
Conversion Factor Not applicable due to same currency (to use 1.00 value)
Coupon Payment Frequency Annual
Observation Dates
N At end of …
1 12 months
2 24 months
All coupons are paid on Observation Date + 2 business days.

The following scenarios are meant for illustration purposes.

  • For Scenario 1 – On Maturity
    Investor will receive MYR 100,000 upon maturity.
    Note: As this is structured investment product, client may receive zero coupon/profit at maturity (worst case scenario). However, given that the customer did not early terminate, the Islamic Money Market placement amount at maturity will provide the principal protection if the market is underperforming or provides returns if the market is overperforms.
  • For Scenario 2 – Index level is lower than Strike Point
    Observation Date 12 months
    N 1
    Index Level @ N=1 98.00%

    The index level on 1st Observation date is lower than Strike Point (i.e. 100%). Hence, investor will not receive any coupon on the 1st Observation Date.

    The calculation of coupon will be as the following:

  • For Scenario 3 – Index Level is higher than Strike Point
    Observation Date 24 months
    N 2
    Index Level @ N=2 118.52%

    The index level on 2nd Observation date is higher than Strike Point (i.e. 100%). Hence, investor will receive MYR 11,112.00 as coupon/profit on the 2nd Observation Date. (Refer Appendix 1 for illustration of Payoff graph).

    The calculation of coupon will be as the following:

  • For Scenario 4 – Early Termination by Investor

    If Investor early terminates after 1 year, the actual amount to be returned to investor will be adjusted for any unwinding cost payable arising from early termination. The investor may receive an amount less than their initial investment amount depending on unwinding cost.

    Early termination date 12 months after placement date
    Investment amount MYR100,000
    Unwinding Cost
    (The cost of terminating, liquidating, or re-establishing any hedge or trading position related to the embedded reference options)    		 (MYR2,300)
    Total amount redeemed (MYR100,000 – MYR2,300) MYR97,700

    * The actual amount to be returned to the Investor due to deduction on unwinding costs will always be paid in the Base Currency.

    PLEASE TAKE NOTE:
    The above simulations are being provided for illustrative purposes only and are not a forecast or indication of any expectation or performance. It does not represent actual termination or unwind cost that may be available to you. It does not present all possible outcomes or describe all factors that may affect the value of the transaction.

Product Documentations

Product Highlight Sheet - Islamic SILX
Term Sheet - Islamic SILX
Index Risk Disclosure - Islamic SILX