Islamic capital market (ICM) transactions are carried out in ways that do not conflict with the conscience of Muslims and the religion of Islam. Here, there is assertion of religious law so that the market is free from activities prohibited by Islam such as usury (riba), gambling (maisir) and ambiguity (gharar).
The ICM is a component of the overall capital market in Malaysia. It plays an important role in generating economic growth for the country. The ICM functions as a parallel market to the conventional capital market, and plays a complementary role to the Islamic banking system in broadening and deepening the Islamic financial markets in Malaysia. To this day, Malaysia’s ICM remains a compelling destination for all stakeholders.
The SC’s early initiative in setting up a dedicated Islamic Capital Market Department (ICMD) was to provide the much needed infrastructure support. The mandate of the ICMD is to carry out development and research activities including formulating and facilitating a long-term plan to further strengthen the ICM in Malaysia.
Malaysia has also driven the innovation to introduce a two-tier Shariah governance framework for the ICM. The establishment of national Shariah Advisory Council (SAC) in May 1996 was embedded under the Securities Commission Act, which empowers the SAC to issue rulings.
