Seventy-nine per cent of the securities listed on Bursa Malaysia are shariah-compliant. That share is the argument Maybank Investment Bank (Maybank IB) is making now that Bursa has registered it as an approved supplier and user under the Islamic Securities Selling and Buying – Negotiated Transaction (ISSBNT) framework.
In practice, the registration lets Maybank IB facilitate trading in shariah-compliant securities. It already handled hedging and risk management for market participants within shariah principles, and this comes on top of that.
“With shariah-compliant securities making up 79% of Bursa Malaysia listed securities, there is potential to further develop our Islamic capital markets, and Maybank IB will continue to play an active role in making Malaysia a leader in this space,” said Dato’ Fad’l Mohamed, the bank’s chief executive officer. He said the new status will help the bank back its clients’ investment management strategies, since investors have a strong appetite for shariah-compliant assets.
What ISSBNT is
Bursa Malaysia launched the framework in 2017. It is regarded as the world’s first shariah-compliant alternative to the Securities Borrowing and Lending – Negotiated Transaction (SBLNT) model. Its design draws on three concepts: bai’ (sale), wa’dan (unilateral promises or undertakings) and khiyar al-shart (conditional option). The aim is to speed up trading and improve liquidity in shariah-compliant securities.
Maybank IB is not the first firm in. CGS-CIMB Securities and Kenanga Investment Bank have also been onboarded as approved suppliers and users. Right now, 179 shariah-compliant securities are eligible for ISSBNT transactions, each reviewed and approved by the Securities Commission’s Shariah Advisory Council.
The exchange’s view
Datuk Muhamad Umar Swift, Bursa Malaysia’s chief executive officer, said every additional participant shows the exchange’s commitment to growing the Islamic equity market. “We look forward to the increased participation and continued support from our brokers to spur the growth and vibrancy of our marketplace,” he said, “upholding Malaysia’s position as the world’s leading Islamic shariah-compliant equities market.”
