KUALA LUMPUR: Bursa Malaysia Bhd recently enhanced its Islamic Securities Selling and Buying – Negotiated Transaction (ISSBNT) framework.
ISSBNT is the world's first shariah-compliant alternative to securities borrowing and lending launched in December 2017.
It involves the sale and purchase of shariah-compliant securities, which delivers the equivalent outcome of a conventional securities borrowing and lending transaction, but is structured according to shariah principles.
In a statement today, Bursa said the enhancement included an "additional remedial option" which allows users to recall or acquire back the securities if the status of the ISSBNT Eligible Securities changed to shariah non-compliant.
The previous framework only allowed transactions to be cash settled via commodity murabahah or replacement with similar shariah-compliant securities as remedial options.
Bursa chief executive officer Datuk Muhamad Umar Swift said the enhanced ISSBNT model was developed in response to industry's demands to meet the need of today's dynamic investment and market landscape.
"The additional settlement option will provide a more facilitative trading environment to enable market participants greater flexibility to buy and sell the shariah-compliant securities under the ISSBNT model which will improve trading liquidity and velocity of shariah-compliant securities assets," he said.
To date, the Securities Commission's Shariah Advisory Council has reviewed and approved 163 Shariah-compliant securities eligible for ISSBNT transactions.
Last year, the exchange on-boarded three approved supplier and user representatives under the ISSBNT Framework, namely CGS-CIMB Securities Sdn Bhd, Kenanga Investment Bank Bhd and Maybank Investment Bank Bhd.
This brings the total number of approved supplier and user representatives to four, including Affin Hwang Investment Bank Bhd, which came on board in 2018.