A type of sukuk structure in which sukuk certificates have an embedded option giving the sukuk holders the right, without the obligation, to convert (exchange) sukuk into real assets. Sukuk holders can convert their current holdings into a number of pre-determined amount (value) of real assets after a specific period of time. Exchange or conversion is typically subject to preset conditions (e.g., lock-up period after subscription).

Exchangeable sukuk are instrumental for investors who seek to protect their position in sukuk- i.e., against unsecured periodic distributions. These investors can walk away from the sukuk contract by converting their sukuk holdings into real assets currently created or owned by the originator. The conversion ratio depends on the current price of the sukuk. For example, if the sukuk price is less than the underlying asset price, the sukuk holders may choose to convert and vice versa.

Exchangeable sukuk are also known as convertible sukuk.