TITLE : REGULATION AND SUPERVISION OF ISLAMIC CAPITAL MARKET

INTRODUCTION• The ICM is a component of the overall capital market in Malaysia. • It plays a complementary role to the Islamic banking system in Malaysia. • As the market became more complex and sophisticated, it needed supportive infrastructure so that the system could operate and function more efficiently and effectively.  • ICM functions in parallel to its conventional counterpart and is growing in terms of sizes, products and sophistication.• Accessible to the largest market, it specifically aims to meet the investment and financing needs for those who wish to undertake capital market transactions in a shariah- compliant way.

REGULATORY BODIES• The main regulatory bodies that govern the Malaysian capital market are:• Bursa Malaysia Berhad.• Securities Commission. • The scope of jurisdiction for these regulating bodies encompasses both Islamic and conventional finance matters. •Malaysia’s banking and insurance sectors come under the jurisdiction of the Central Bank, Bank Negara Malaysia (BNM). •While the capital market is regulated by the Securities Commission Malaysia (SC).

REGULATORY FRAMEWORK• Regulatory of framework of the ICM in selected jurisdiction such as

Malaysia, Saudi Arabia, the United Arab Emirates, Indonesia and the United Kingdom• Malaysia are successfully establishes its own unique model and sets

new benchmarks.• Frameworks strategically put in place by the respective Malaysia

authorities to deal with specific areas.• This conceptual is to ensure appreciates and recognizes the complex

and sophisticated.

Malaysia has well-developed financial infrastructure that comprise of effective legal, regulatory and supervisory

framework that underpin the stability of financial system

SECURITIES COMMISSIONEstablished in 1 March 1993 under the Securities Commission Act 1993.

SC is a self-funding statutory body with investigative and enforcement powers.

It reports to the Minister of Finance and its accounts are tabled in Parliament annually.

Statutory body entrusted with the responsibility of regulating and systematically developing the Malaysia’s capital markets.

Direct responsibility in supervising and monitoring the activities of market institutions and regulating all persons licensed under the Capital Markets and Services Act 2007

ROLES OF SECURITIES COMMISSION• 1)Supervising exchanges, clearing houses and central depositories• 2)Registering authority for prospectuses of corporations other than unlisted recreational clubs• 3)Approving authority for corporate bond issues• 4)Regulating all matters relating to securities and derivatives contracts

• 5)Regulating the take-over and mergers of companies• 6)Regulating all matters relating to unit trust schemes• 7)Licensing and supervising all licensed persons• 8)Encouraging self-regulation• 9)Ensuring proper conduct of market institutions and licensed persons

How Securities Commission relate with Islamic capital marketIn an Islamic capital market (ICM), market transactions are carried

out in ways that do not conflict with the conscience of Muslims and the religion of Islam.

Securities Commission is regulate for the ICM securities.The Securities Commission Malaysia has long identified capacity

development as an essential dimension of our multi-pronged strategy.The SC’s early initiative in setting up a dedicated Islamic Capital

Market Department (ICMD) within its Strategy and Development Business Group was to provide the much needed infrastructure support.

SHARIAH ADVISORY COUNCIL Established in May 1997.The SAC has been given the authority for the ascertainment of

Islamic law.In The roles and functions of the SAC have been further

reinforced in the recent provisions of the Central Bank of Malaysia Act 2009.

While the rulings of the SAC shall prevail over any contradictory ruling given by a Shariah body or committee constituted in Malaysia.

ROLES OF SAC • Review the products and services to ensure conformity with Syariah

requirements • Review and endorse relevant documents• Supervise investments made by the institutions in the ICM• Deliberate on Shariah issues pertaining to the day-to-day operations of

the institutions and provide advice accordingly

ROLES OF SAC • Conduct research and development of new products • Provide training and education on muamalat based on shariah contract• Assist related parties on shariah matters and provide advice upon

request

HOW SAC APPOINTED• Members of the SAC are appointed by the Securities Commission once every two

years.• SAC members appointed by the Yang di-Pertuan Agong.• The members of the SAC comprise of individuals who are in a position to present

Shariah opinions and those who have vast experience in the application of Shariah, particularly in the areas of Islamic economics and finance.• The members of the SAC consist of Islamic scholars or jurists and Islamic finance

experts.• Members of the SAC are appointed by the Securities Commission once every two

years.• SAC members appointed by the Yang di-Pertuan Agong.• The members of the SAC comprise of individuals who are in a position to present

Shariah opinions and those who have vast experience in the application of Shariah, particularly in the areas of Islamic economics and finance.• The members of the SAC consist of Islamic scholars or jurists and Islamic finance

experts.

CONCLUSION• In this era, Malaysian Islamic Capital Market was growing rapidly and immediately. Malaysia was faraway exceed other Muslim countries in term of capital market infrastructure with persistent support by the government for the growth of Malaysian Islamic Capital Market. • Initiatives was taken by the Malaysian government towards a global hub in the development of Islamic Capital Market. Therefore, legal framework needs to be created to regulate and supervise Islamic Capital Market in Malaysia.• Securities Commission and Shariah Advisory Council is two bodies who plays an important role in ensuring Malaysia as the international hub desire accomplished.