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CHP 7: Legal Framework of Islamic Capital Market - Coggle Diagram
CHP 7: Legal Framework of Islamic Capital Market
Introduction
Capital Market
-Market securities where the firm and government can raise long-term funds.
Primary Market
Securities are purchased directly from issuing company
Secondary Market
Financial market issued by firm such as stocks, bonds, options are bought and sold
Regulatory Bodies
Main regulatory bodies in Malaysia capital market
Securities Commision
-BURSA Malaysia Berhad
Labuan Offshore Financial Services Authority (LOFSA)
Regulating bodies encompasess both islamic and conventional finance matters.
Malaysian Capital Market is govern by:
Capital Markets and Sevices Act 2007
Securities Industry (central Depositories Act) 1991
Securities Commision Act 1993
Companies Act 1965
Offshore Companies Act 1990
Labuan Financial Services and Securities Act 2010
Securities Commision Malaysia
A self-funded statutory body that was establish on 1 March 1993 and responsible to regulate the Malaysia capital market
Mission: To promote and maintain fair, efficient, secure & transparent securities and derivatives markets
Objectives of Islamic SC
:check: The protection of investors
protect from manipuative/ misleading pactice
full and timely disclose
:check: Ensuring markets are fair, effiecient and transparent
regulation should detect any unfair trading
aim to ensure investors are given fair access to market
:check: Reduction of systematic risks
reduce financial failure of market intermediaries
promote and allow eefective risk management.
Responsibilities of SC
Developing overa capital market and its market segments
Facilitating innovation and digital services through capital market
Creating avenues for sustainable financing ecosystem.
Ensuring proper method to conduct market participants through supervisory
Facilitate greater cross--border regulatory co-operation and though leadership.
SC's Regulatory Function
Registering authority for prospectuses of corporations other than unlisted recreational clubs.
Approving authority for corporate bond issues.
Regulationg all matters relating to securities and futures contracts.
Licensing and supervising all licensed persons.
Ensuring proper conduct of market institutions and licensed persons.
Three-pronged approach for SC
:green_cross: Self-disclipline
Disclose, transparency, risk management, ethical conduct & culture for intermediaries and companies
:green_cross: Regulatory Disciplines
strong regulaotry framewrok, strong oversight (spervision and surveillance), effective enforcement and education awareness.
:green_cross: Market Disciplines
Shareholder activitism and market discipline
Investors associations, watchdog group, investment analysts and media.
Bursa Malaysia
An exchange holding company incorporated in 1976 and listed in 2005 which provides easy access to many investment products and services, connect domestic and foreign market participants to all types of opportunities to help them expand it.
Products: Equities, derivatives, offshore and Islamic assets as well a Exchange Traded Fund (ETFs), Real Estate Investment Trust (REITs) and Exchange Traded Bonds and Sukuk (ETBS)
No requirement for a seperate regulation in developing Islamic Capital Market as long as get approval by Shariah
Compatibility of IOSC's core principles with Islamic securities market.
Malaysian's ICM operates
SC commanded to develop capital market.
Government will give support & commitment
Brought to national level of SAC
Build a well-developed Islamic banking and takaful
Clear and consistent policies is being used.
Facilitative regulatory & tax framework.
Bringing regulation of ICM into mainstream
The concept of trust that give direct ownership in assets by holder.
The concept of equality where legal title on asset is held by one party who hold for benefit of the other party where latter has right to asset through beneficial ownership.
The transfer of asset by way of sale, lease
Capital Market and Serives Act 2007
the business of carrying on any regulated activity.
-any proposal that falls within subsection 212(2).
-any transaction relating to future contract.
-the establishing operating/maintai stock market.