SC to lead international task force on Islamic capital market – SC Chairman re-elected to chair Asia-Pacific Regional Committee

The Securities Commission (SC) of Malaysia was given a mandate by the Executive Committee of the International Organisation of Securities Commissions (IOSCO) to lead a task force on Islamic capital markets. The SC received this mandate at the 2002 IOSCO Annual Conference and meetings in Istanbul, Turkey which were held from 18-24 May 2002.

The task force will assess developments and regulatory implications of Islamic capital markets globally and is expected to present its report to the IOSCO Executive Committee early next year.

“The recognition given by IOSCO to allow the SC to lead this task force is an important achievement and reflection of Malaysia’s position among the international regulatory community as well as of its continued efforts at developing the Islamic capital market,” said SC Chairman Datuk Ali Abdul Kadir.

“The adoption of the study recognises the great potential that Islamic funds provide for these niche markets, which are currently mainly invested in banks and allows for regulatory issues to be identified early and addressed consistently.

“The setting up of this task force also complements Malaysia’s aspirations for the Islamic capital market, as highlighted in the Capital Market Masterplan,” he said.

Datuk Ali added it was imperative for IOSCO as the global authority on capital market regulatory matters to address key issues relating to this strategic area.

Datuk Ali was also re-elected as Chairman of the Asia-Pacific Regional Committee (APRC) of IOSCO, at the 2002 IOSCO Annual Conference, a post he held since May 2000.

Datuk Ali in his speech during the Annual Conference, called for greater co-operation amongst regional markets to provide further incentives for portfolio investors to invest in the region.

“Emerging markets must work together and help each other if they wish to attract global portfolio investors as such investors would prefer to invest in a diversified regional portfolio rather than in a single country,” said Datuk Ali.

Datuk Ali also mentioned that while emerging markets offer increasingly attractive growth opportunities for portfolio investors, these markets need to be more proactive and innovative in their efforts to attract such investors.

IOSCO also approved for publication a report on corporate bond markets prepared by the IOSCO Working Group on Secondary Market Regulation, chaired by Mr. Ranjit Ajit Singh, Director of the Securities Commission.

The report details valuable information on the development of corporate bond markets in 22 emerging market jurisdictions and identifies key issues related to the development of robust corporate bond markets.

At the Annual Conference, IOSCO also endorsed a multilateral Memorandum of Understanding (MoU) concerning Consultation, Cooperation and the Exchange of Information.

“The endorsement of this MoU represents a significant step in responding to the challenges of a globalised securities market and establishes an international benchmark for cooperation and information sharing.

“The MoU will facilitate enforcement of cross-border securities violations and improve the ability to enforce securities regulation worldwide,” said Datuk Ali.

The MoU is the result of a process which began in October 2001. Following the events of September 11, a Special Project Team led by Mr. Michel Prada, President of the French securities regulator, the Commission des Opérations de Bourse, and of which the Securities Commission was a member, explored actions that securities regulators could take to enhance cooperation and information sharing.

30 May 2002