Islamic Capital Market

As a global leader for the ICM, the SC continues to advance ICM stakeholder engagements and leverage Malaysia’s prominent ICM thought leadership. Throughout 2022, the SC-led ICM events have brought key stakeholders together, including scholars, practitioners, regulators, intermediaries, and investors to catalyse discussions ranging from the role of ICM in advancing sustainable development, inclusivity, to Islamic social finance and Islamic fintech. Various strategic platforms, such as conferences, workshops and forums, have provided the impetus to build ICM’s stakeholder engagement successes both on a domestic and global level.

Elevating the Sustainability Agenda Through the ICM

Catering to the broader stakeholders’ needs is core to the objectives and intent of the SC-ICM stakeholder engagements in 2022, in line with the SC’s CMP3. The emphasis is on achieving a stakeholder economy that is driven by long-term value creation, where businesses assume greater responsibilities beyond short-term profits and account for the needs of all stakeholders, ranging from shareholders, employees and business partners to the environment, society, and community.

The movements to promote sustainability and preserve the interests of climate and society are also in line with the concept of maqasid al-Shariah (objective of Shariah), embodying the attainment of benefits and prevention of harm for mankind.

Profiling Islamic Finance Globally

In solidifying Malaysia’s efforts in global Islamic finance profiling, the SC and BNM jointly organised The Royal Award for Islamic Finance on 4 October 2022.
The Royal Award for Islamic Finance 2022
The Royal Award for Islamic Finance (The Royal Award) aims to recognise visionary individuals whose outstanding achievements and innovative ideas contribute significantly to the growth of Islamic finance, the global economy, and social progress of communities around the world. It is jointly organised by the SC and BNM under the Malaysia International Islamic Financial Centre (MIFC) initiative. The Royal Award is given out once every two years, and the inaugural Award was presented in 2010.

The selection of the Award recipient was undertaken by an international jury, comprising eminent Shariah scholars, academicians and finance practitioners, chaired by Tun Musa Hitam. The Royal Award comes with a medallion and a certificate of recognition.

Tan Sri Dr. Mohd Daud Bakar was named as the sixth recipient of the Royal Award for Islamic Finance. The award ceremony was held on 4 October 2022, conferred by His Majesty, the Yang di-Pertuan Agong, accompanied by HRH Sultan Nazrin Muizzuddin Shah, the Sultan of Perak and the Royal Patron for Malaysia’s Islamic Finance initiative.

In conjunction with the 2022 Royal Award, two new categories were also introduced, namely the Emerging Leader Prize and Impact Challenge Prize. The Emerging Leader Prize recognises and celebrates young international talent who have made outstanding contributions to the advancement of innovative ideas in Islamic finance. The inaugural prize was awarded to Umar Abdullah Mahmud Munshi, the co-founder and Group Managing Director of Ethis Group.

The Impact Challenge Prize is organised in collaboration with The World Bank Group Inclusive Growth and Sustainable Finance Hub in Malaysia as a technical partner and supported by the Malaysia Digital Economy Corporation. It aims to bring greater recognition to digital and innovative solutions based on Islamic finance principles or Islamic finance enablers, which can improve the economic and social resilience of financially impacted communities globally. Preceded by a six-week accelerator programme, the selection of winners were done by a panel of judges comprising senior representatives from BNM and SC, IsDB, World Bank Group, and the venture capital industry. The Impact Challenge Prize was awarded to duithape (Indonesia) and Pod (Malaysia) in a ceremony on 5 October 2022 at Sasana Kijang, Kuala Lumpur. Profiling Islamic Finance Globally

In solidifying Malaysia’s efforts in global Islamic finance profiling, the SC and BNM jointly organised The Royal Award for Islamic Finance on 4 October 2022.

Read more on media release ‘Tan Sri Dr. Mohd Daud Bakar Named Recipient of the Royal Award for Islamic Finance 2022

Raising Awareness for MSMEs

The SC had participated in various awareness programmes in collaboration with the HDC and the Bumiputera Agenda Steering Unit (TERAJU) as part of efforts to improve financial inclusion for the economy and raise awareness on market-based funding opportunities and avenues. Being a significant stakeholder in the economy, the MSMEs continue to rely on traditional sources of funding, and the workshop seeks to close this financing gap by connecting the MSMEs with RMOs through the ICM, creating more avenues for alternative fundraising.
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Mitigating Systemic Risks And Promoting Financial Stability

Enhanced Risk Governance Framework

In 2021, the SC-wide risk governance framework was enhanced as part of an overall initiative to have an effective integrated and predictive risk surveillance to maintain regulatory agility.

The structured risk governance framework integrated the wider spectrum of risks such as technology, cyber and conduct risk at the SC’s Systemic Risk Oversight Committee (SROC) and Accounting, Market and Corporate Surveillance Committee (ACMS).

Intensified surveillance

The SC continued to intensify its surveillance of systemic risk to maintain market resilience and stability. Regular SROC engagements were held to deliberate concerns emanating from various segments across the capital market. Domestic equity and bond market, foreign fund flows and trade participation continued to be monitored closely for potential stress points. 

In addition, measures and economic stimulus packages introduced by the government to weather the impact of COVID-19, market trading conduct and the financial position of listed companies were among the focus areas for discussion.

Thematic assessments

The SC also conducted thematic assessments covering investors’ fund flows, the position of firms, and policy decisions to ascertain the possible impact on the capital market. In 2021, the SC reviewed and enhanced its crisis indicators on potential emerging risks in the
capital market. 

The enhanced crisis indicators provided a reference point for escalation to SROC when the identified indicators and triggers materialised and ensured prompt response to manage and prevent any issues of concern that might lead to a systemic crisis.

Joint regulatory discussions

In 2021, the SC conducted frequent joint regulatory discussions with other authorities such as Bank Negara Malaysia (BNM) and Labuan Financial Services Authority (Labuan FSA) to identify systemic risk concern areas within the financial and capital markets in Malaysia.

Monitoring of various components of the capital market

The SC continued its efforts to undertake a methodological and integrated approach to ensure any potential systemic risk was being monitored, mitigated, or managed. Figure 1 highlights the findings from the following risk assessments on the various components of the capital market.

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