The growing recognition of the increasing significance of the Islamic capital market, especially in view of rising cross-border transactions, has triggered the need for stronger oversight, greater transparency and more robust disclosure requirements, global standard-setters and senior regulators acknowledged today.
The Islamic Financial Services Board (IFSB) and the International Organisation of Securities Commissions (IOSCO), two global standard-setters in their respective fields, collaborated with the Securities Commission Malaysia (SC) to organise a high-level roundtable in Kuala Lumpur, themed “Disclosure Requirements for Islamic Capital Market Products”.
The roundtable represents a significant step towards the development of international regulatory standards and best practices relating to disclosure requirements for Islamic capital market products.
“As the Islamic capital market expands and becomes more global, it is increasingly important that issues surrounding investor protection and market integrity are addressed from a cross-jurisdictional perspective. It is therefore critical for regulators and standard-setters such as the IFSB and IOSCO to further examine disclosure regimes for Islamic capital market products, with a view to allowing more informed investment decision-making and to promote the further growth of the Islamic capital market,” said Datuk Ranjit Ajit Singh, Chairman of the SC, who is also an IOSCO Board member and the Vice-Chair of the IOSCO Emerging Markets Committee.
Jaseem Ahmed, Secretary General of IFSB, emphasised that promoting cross-border financing and investment through Islamic finance is critical to attaining the depth and scale in Islamic capital markets needed to be competitive. “This will require the adoption of robust regulatory and disclosure practices that give confidence to investors and consumers alike. IFSB hopes that this collaboration with IOSCO will facilitate a process leading to a set of practices that could be harmonised or mutually agreed upon,” he said.
David Wright, Secretary General of IOSCO said, “The recent financial crises highlighted the importance of sound disclosure regimes in mitigating systemic risk and building confidence in the financial markets. Given the tremendous growth of the Islamic Finance industry - an increasingly important segment of the global financial markets – it is essential to achieve greater harmonisation in disclosure requirements across jurisdictions where Islamic capital market products are offered.”
Participants of the closed-door roundtable also discussed the importance of effective disclosure requirements in facilitating greater cross–border Islamic capital market activities, analysed the risks and challenges arising from inadequate disclosures in the area of Sukuk and Islamic Collective Investment Schemes and identified potential approaches which can be adopted by standard-setters, regulators and market participants alike.
The roundtable, held at the Securities Commission today, was attended by senior regulators, international institutions, academia and leading market practitioners from 16 jurisdictions.
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