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Bursa Malaysia enhances Islamic securities

Selling and Buying - Negotiated transaction framework

by moneycompass
February 10, 2023
in Current News, Local Market News
Bursa Malaysia
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Kuala Lumpur, 9 February 2023 – Bursa Malaysia Berhad (“Bursa Malaysia” or the  “Exchange”) recently enhanced its Islamic Securities Selling and Buying – Negotiated  Transaction (“ISSBNT”) Framework. ISSBNT is the world’s first Shariah-compliant alternative  to Securities Borrowing and Lending, which the Exchange launched in December 2017. It involves the sale and purchase of Shariah-compliant securities, which delivers the  equivalent outcome of a conventional securities borrowing and lending transaction, but is  structured according to Shariah principles. 

The enhancement includes an “Additional Remedial Option” which allows users to recall or  acquire back the securities if the status of the ISSBNT Eligible Securities changes to Shariah  non-compliant, while the previous framework only allowed transactions to be cash settled  via commodity murabahah or replacement with similar Shariah-compliant securities as  remedial options. 

The “Additional Remedial Option” entails instituting a seven (7) Market Days grace period  to facilitate and provide an ideal window and sufficient time for securities transfers and  transactions to take place, after taking into account the T+2 clearing and settlement cycle.  However, in order for this option to apply, the exercise must be completed within seven (7)  Market Days from the effective date of the updated List of Shariah-compliant Securities by  the Shariah Advisory Council of the Securities Commission Malaysia. 

“The enhanced ISSBNT model was developed in response to industry’s demands to meet the  need of today’s dynamic investment and market landscape,” said Datuk Muhamad Umar  Swift, CEO of Bursa Malaysia. “The additional settlement option will provide a more  facilitative trading environment to enable market participants greater flexibility to buy and  sell the Shariah-compliant securities under the ISSBNT model which will improve trading  liquidity and velocity of Shariah-compliant securities assets.” 

To date, the Securities Commission Malaysia’s Shariah Advisory Council has reviewed and  approved 163 Shariah-compliant securities eligible for ISSBNT transactions. Last year, the  Exchange on-boarded three (3) Approved Supplier and User Representatives under the 

ISSBNT Framework, namely CGS-CIMB Securities Sdn Bhd, Kenanga Investment Bank Berhad,  and Maybank Investment Bank. This brings the total number of Approved Supplier and User  Representatives to four (4), including Affin Hwang Investment Bank Berhad, who came on  board in 2018. 

The FAQs on the updated ISSBNT Framework is available on Bursa Malaysia’s website at: https://www.bursamalaysia.com/reference/faqs/islamic_market/faqs_on_issbnt 

To learn more about ISSBNT in general, please visit:  https://www.bursamalaysia.com/trade/post_trade/issbnt/operational_framework 

On a separate development, Bursa Malaysia also enhanced its Central Matching Facility  (“CMF”) System in January 2023 to augment the Exchange’s end-to-end Shariah-compliant  securities trading platform, Bursa Malaysia-i. The CMF System enhancement enables  Clearing Participants to conduct Institutional Settlement Service transactions through  Shariah settlement, which is hoped to further strengthen the Shariah investing ecosystem.

 

Read more : Launch of ConsuMerchant Book – Money Compass

 

Tags: Bursa Malaysia
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