TITLE : REGULATION AND SUPERVISION OF ISLAMIC CAPITAL MARKET

1. TITLE : REGULATION
AND SUPERVISION OF
ISLAMIC CAPITAL
MARKET

2. 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.

3. 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).

4. 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.

5. Malaysia has well-developed financial infrastructure that comprise of
effective legal, regulatory and supervisory framework that underpin
the stability of financial system

6. SECURITIES COMMISSION
Established 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

7. 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

8. • 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

9. In 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.

10. 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.

11. • 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

12. • 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

13. 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.