Kuala Lumpur, 30 July 2009

SC leads discussion on Islamic structured products

The Securities Commission Malaysia (SC) has taken the initiative in promoting the understanding of Islamic structured products as well as addressing related regulatory and market issues. Such understanding is essential in developing the instrument, thereby adding depth and breadth to the fast-expanding Islamic capital markets both in Malaysia and around the world.

At the third International Islamic Capital Market Forum organized by the SC in Kuala Lumpur today, Islamic finance experts and scholars discussed various aspects relating to Islamic structured products, including how creative applications of certain Islamic contracts could provide hedging mechanisms for the Shariah compliant portfolios.

In some markets, basic instruments have been packaged into structured products with specific investment goals and risk profiles, investment opportunities traditionally available to institutions and high net worth individuals are being made available to the general investing public.

In her keynote address, SC Chairman Tan Sri Zarinah Anwar cautioned that these products raise important investor protection concerns. As structured products become more sophisticated, so is the inherent risk attached to these instruments. Investors have thus been subjected to losses for being ill-informed.

She added at the one-day forum, “the lessons from the crisis though have served to emphasise the need to address the ethical considerations of finance as underscored by the Shariah with its strict rules on certainty, transparency, leverage and risk taking.”

More than 270 senior industry officials, issuers, investors and regulators from Malaysia and other countries attended the forum. It featured Malaysian and foreign finance and Shariah experts as speakers and panelists including:

  • Dr Nikan Firoozye, Islamic Finance Resources (IFR) Advisor, UK
  • Dr Aznan Hassan, Shariah Advisor, Bursa Malaysia
  • Haroon Ahmad, Head of Business Development, EIS Asset Management, UAE
  • Bernardo Vizcaino, Managing Director, Amsar Partners LLP, Singapore
  • Tuan Haji Mohd Tarmidzi Ahmad Nordin, CEO, Etiqa Takaful Berhad
  • Ibrahim Hassan, Acting CEO, Maybank Islamic
  • Datuk Ranjit Ajit Singh, Managing Director, Securities Commission Malaysia

Among the topics covered were the market landscape for Islamic structured products and hedging tools and the regulatory framework for Islamic structured products. There was also a panel discussion on the resilience of Islamic finance and its future direction.