A structured product/ instrument that is modeled on a conventional equity-linked note(ELN). The conventional one provides investors with a fixed income/ principal protection and equity market upside potential. It is structured by combining a call option on equity (individual stock or equity basket or equity index) with a long position in a discount bond. The initial investment layout is covered by bond redemption and coupon payments, while the final payment at maturity depends on the appreciation of the underlying equity (i.e., in case the upside potential materalized).

The Islamic ELN could be structured by taking a long position in sukuk such as ijarah sukuk, as source of stable periodic payments. The call option component could be created using arboun (urboun) on screened equity. For example, investors may buy Islamic ELNs which worth 200 million dinars and are structured on ijarah sukuk (60%: 120 million dinars) and arboun on shari’ah-compliant stocks (40%: 80 million dinars).

This instrument suits conservative investors (both in equity and fixed-income instruments) who seek equity exposure (upside potential) with limited level of risk.