Bursa Malaysia Seeks Public Feedback On Rule Framework For Islamic Securities Selling And Buying Negotiated Transaction Model - A Shariah-Compliant Alternative To The Securities Borrowing And Lending Negotiated Transaction Framework

Bursa Malaysia Berhad (“Bursa Malaysia”) today issued a consultation paper to seek public feedback on the proposed Islamic Securities Selling and Buying Negotiated Transaction (“ISSB-NT”) framework.

The introduction of the ISSB-NT framework aims to provide a Shariah-compliant alternative to the Securities Borrowing and Lending Negotiated Transaction (“SBLNT”) framework, to further grow the Shariah-compliant securities. The framework is expected to provide a more facilitative trading environment and improve trading liquidity and velocity of securities whereby market participants have an alternative avenue which is compliant with Shariah principles.

The proposed ISSB-NT framework is expected to facilitate growth and development in Shariah-compliant securities market, particularly in the Islamic Exchange Traded Funds. It will also enhanced liquidity as well as facilitate better hedging and risk management activities by Islamic fund and wealth managers. The applicable Shariah principles applied in respect of the proposed ISSB-NT framework are based on the endorsement by the Shariah Advisory Council of the Securities Commission Malaysia and it includes the feature of wa`dan (two unilateral promises/undertakings), khiyar al-shart (conditional option) and the provision of collateral as security for the indebtedness.

The consultation paper on the proposed rule changes for the above seeks insights and inputs from potential suppliers, users, representatives to the suppliers and the users, fund managers, other market participants, investors, industry associations and the general public in respect of the proposed ISSB-NT framework, including the roles and responsibilities of the relevant parties prescribed in the following rules:

the Rules of Bursa Malaysia Securities Clearing Sdn Bhd;
the Rules of Bursa Malaysia Depository Sdn Bhd; and
the Rules of Bursa Malaysia Securities Berhad.

The consultation paper is available at: http://www.bursamalaysia.com/market/regulation/rules/public-consultation

The industry and the public are invited to submit their comments and feedback to Bursa Malaysia before the closing date of 19 April 2017.