Stakeholder Economy with ICM and SRI

As a global leader for the ICM, the SC continues to advance ICM stakeholder engagements and leverage Malaysia’s prominent ICM thought leadership. In tandem with the tenets of social and responsible finance, the SC also strives to promote a sustainable capital market where the involvement of capital market intermediaries and other relevant stakeholders is also crucial for the success of SRI initiatives and the development of a facilitative and vibrant SRI ecosystem in Malaysia.

ICM As A Key Driver for a Stakeholder Economy
Islamic principles, such as risk-sharing and wealth redistribution, position the ICM as a key driver for a stakeholder economy, as outlined in the SC’s CMP3. To achieve this vision, the ICM seeks to establish strong regulatory frameworks and facilitate effective platforms for its ecosystem, which includes scholars, practitioners, regulators, intermediaries, and investors to thrive and continue to innovate.

The SC serves as a vital link among these stakeholders in the ICM, facilitating collaborations at both domestic and international levels. In 2023, the SC embarked on various initiatives to strengthen existing relationships and forge new connections through platforms such as conferences, roundtables, forums, and workshops, all aligning with CMP3 objectives.

Key initiatives moving forward include expanding and advancing key areas within the ICM including Islamic fintech, Islamic social finance, and impact and sustainable investing. These will form part of the SC’s efforts to create a more robust, inclusive, and transformative economy.
Islamic Fintech
Fintech Roundtable
Themed ‘Islamic Fintech for Social Good’, a roundtable co-organised by the SC and CMM, supported by Islamic Finance News (IFN) was held on 18 September 2023 at Hamilton Place, UK. The event gathered Islamic fintech players from Malaysia and the UK, who deliberated on ways Islamic fintech and digital market platforms can be leveraged to scale up and lead innovation in social impact and social finance.
Elevating Sustainability Agenda and Social Finance through the ICM
Waqf and Islamic Capital Market Conference
On 20 July 2023, the Waqf and Islamic Capital Market Conference (Waqf Conference), organised by the SC in collaboration with Universiti Sains Malaysia, DRB-HICOM University, and supported by Federal Land Development Authority was held at the SC.
Elevating Sustainability Agenda and Social Finance through the ICM
14th SC-Oxford Centre for Islamic Studies Roundtable
The 14th SC-OCIS Roundtable, themed ‘Investing Towards the Common Good: Impact, Stewardship and Ethical Considerations’, was held in Kuala Lumpur on 24 and 25 August 2023. The theme is in line with the SC’s CMP3 objective of enabling greater capital mobilisation for businesses that create value for stakeholders of the economy via SRI and ICM.
Elevating Sustainability Agenda and Social Finance through the ICM
SC-World Bank Conference
The SC-World Bank Conference (Conference), themed ’Social Impact Investment and Islamic Finance: Catalyzing Positive Change through Financial Innovation’, was held at the SC on 2 November 2023. This was the 4th instalment of the Conference, which aims to provide a platform for the sharing of views and knowledge on topical themes relevant to Islamic finance and the ICM, as well as recommendations to move forward.
Institutionalising Shariah Governance
SC Nadwah of Shariah Advisers in Islamic Capital Market
The SC’s inaugural Nadwah of Shariah Advisers in Islamic Capital Market 2023 (SC Nadwah) was held with the industry, committee members, the SC-registered Shariah advisers, and ICM stakeholders. The event underscores the SC’s dedication to advancing applied Shariah knowledge and fostering innovative Shariah solutions within the ICM fraternity.

The SC Nadwah provided participants with insights into the latest resolutions of the SC Shariah Advisory Council (SAC) and regulatory updates in the ICM. It also focused on enhancing the professionalism and competence of Shariah advisers by facilitating interactive panel sessions. In line with the SC’s objective of expanding the Shariah advisers’ community, the SC Nadwah will continue to be held annually moving forward.
Building a Sustainable Capital Market
Essential for the SC’s endeavours in crafting SRI policies and fostering a sustainable capital market is its active engagement with various stakeholders including public policymakers. These engagements ensure alignment between the SRI strategic objectives with broader national policies and commitments towards sustainable development and climate goals.
Joint Committee on Climate Change
The Joint Committee on Climate Change (JC3), in which the SC and BNM are Co-Chairs, continues to actively engage and collaborate with relevant ministries and government agencies as well as industry associations to encourage greater alignment in the financial sector’s response to climate-related risks with national and business strategies. Such engagements were conducted through platforms such as meetings, outreach sessions, and conferences. Notably, two outreach sessions were held in June and November 2023 respectively to provide a platform for industry players to share their experiences on their net-zero journey in supporting Malaysia’s transition to a low-carbon economy.
Engagement with Government Ministries and Agencies
The SC continues to work with government ministries and agencies in advancing the sustainability agenda. On 4 July 2023, the SC organised a closed-door SRI sharing session to enhance the understanding and awareness of key ministries on SRI initiatives in the Malaysian capital market. Attendees of the session included working-level representatives of MOF, NRECC, Ministry of Education (MOE), MITI, etc.

The SC also participated in the Energy Transition Townhall session on 7 March 2023, which was chaired by YB Tuan Nik Nazmi Nik Ahmad, Minister of NRECC. This session served as a platform for stakeholders from the Malaysian energy sector to share their feedback on the country’s energy transition direction. Additionally, on 17 April 2023, the SC participated in a National Energy Transition Roadmap (NETR) workshop organised by the MOE. The workshop sought feedback and input from among others, key stakeholders from Malaysia’s energy sector, on energy transition-related initiatives and projects that could catalyse Malaysia’s economic growth and facilitate Malaysia’s transition to net zero.

Promoting SRI Awareness and Capacity Building Locally and Internationally
The SC organised numerous awareness and capacity-building initiatives as well as participated in local and international sustainability events as part of knowledge sharing and to further enhance the profiling of SRI. These initiatives are crucial to accelerate the growth and development of a facilitative SRI ecosystem in Malaysia.

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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