Building on Malaysia’s strength in the Islamic capital market, the Securities Commission Malaysia (SC) will continue to broaden its Socially Responsible Investing (SRI) Sukuk framework and introduce Islamic SRI positive screening for equity offerings this year.
SC’s deputy chief executive Datuk Zainal Izlan Zainal Abidin said; “The Islamic capital market is one of our key priorities. We continually look at how we can expand and broaden the reach of Islamic finance and the Islamic capital market. In 2014, we introduced the SRI Sukuk framework, which combines the elements of sukuk with the SRI purpose of utilisation of the proceeds.”
“Now we are exploring [how to develop further] shariah-compliant equities,” he added. He was delivering his keynote presentation on Sustainability and Islamic Finance at the Kuala Lumpur Islamic Finance Forum 2019 in Kuala Lumpur today.
“From the interest that we see globally, we think there is a space we can fill by introducing a methodology for the positive screening of shariah-compliant counters. While we still have the shariah screening methodology, which is endorsed by the Shariah Advisory Council, we think this adds another layer to the screening exercise.”
Malaysia remained a global leader in the Islamic capital market (ICM) with RM1.9 trillion in Shariah-compliant equities and sukuk outstanding. Malaysia also continued to be the world’s largest sukuk market.
Following the issuance of the world’s first green sukuk in Malaysia in 2017, the SC established a RM6 million Green SRI Sukuk Grant Scheme in 2018 to incentivise issuers by offsetting up to 90% of external review costs incurred in relation to the issuance of green SRI sukuk. Four applications have since been approved, supporting RM2.2 billion in funds raised to facilitate the financing of projects that benefit the environment and society.
To meet the demands for convenient and affordable investment products and services, the SC licensed Malaysia’s first digital investment manager in 2018. Building upon the strong momentum in facilitating inclusive and sustainable growth, additional Fintech providers including ECF, P2P & digital asset exchange operators and digital investment managers are expected to be operational in 2019.
The SC also broadened retail access to the bond and sukuk markets by liberalising regulatory requirements for primary issuances and introducing a seasoning framework to allow retail access to existing corporate bonds and sukuk. Measures were also introduced in 2018 to encourage equities trading, including liberalising rules on margin financing and intraday short selling.