Bursa Malaysia launches Islamic Securities Selling and Buying Negotiated Transaction framework

KUALA LUMPUR: Bursa Malaysia Bhd today launched the world’s first syariah-compliant alternative to the conventional Securities Borrowing and Lending Negotiated Transaction (SBLNT) framework, called Islamic Securities Selling and Buying Negotiated Transaction (ISSBNT), to further develop the Shariah-compliant securities market.
Securities Borrowing and Lending (SBL) allows investors to short sell in a bid to create a more vibrant capital market. As of now, there are a total of 270 stocks can be short sold, according to Bursa Malaysia website.
The ISSBNT, designed and based on the SBLNT framework, is developed to provide a more facilitative trading environment and improve trading liquidity and velocity of securities whereby market participants have an alternative avenue, that is compliant with syariah principles.
Speaking at the launch ceremony, Bursa Malaysia CEO Datuk Seri Tajuddin Atan said the stock exchange is hoping for a 5% to 10% growth in fund transactions within the next 12 months in its newly-launched ISSBNT framework.
He said the growth is in accordance with the SBLNT framework remarkable growth, which has grown to RM4.7 billion in 2017 from RM400 million in 2012.
Tajuddin said the key objectives of ISSBNT in the Islamic capital market includes: enabling hedging and risk management strategies; increase market liquidity; market efficiency; limit upward price manipulation; correct overpriced stock as well as facilitating share price discovery.
Furthermore, he said the launch of ISSBNT will be significant to Islamic Funds and wealth managers as it is expected to advance the development of the Islamic Exchange Traded Funds (i-ETF) market through improved liquidity; better facilitate hedging and risk management activities of Islamic fund and wealth managers.
Currently, Tajuddin said 686 out of 902 companies listed on the exchange or 76% are syariah compliant, adding that the syariah market capitalisation as of November 2017 was 61.1% of total market capitalisation of RM1.84 trillion.
"This doesn’t take into account other listed syariah compliant offerings such as i-ETFs, i-REITs and Exchange Traded Sukuk," he said.
Tajuddin said the SBLNT framework was chosen as the preferred model to develop ISSBNT because of its flexibility, allowing terms to be negotiated and agreed upon by parties of the transaction.
“It is also widely used by the market compared to other SBL models in the market,” he added.