The Islamic Capital Market (ICM) refers to the market where the activities are carried out in ways that do not conflict with the conscience of Muslims and the religion of Islam. In other words, the ICM represents an assertion of religious law in the capital market transactions where the market should be free from the involvement of prohibited activities by Islam as well as free from the elements such as usury (riba), gambling (maisir) and ambiguity (gharar).
The ICM today is one of the components in the overall capital market in Malaysia. It plays similar important role as other capital market components in generating the economic growth of the country. The ICM has functioned as a parallel market to the conventional capital market for capital seekers and providers, and has played a complementary role to the Islamic banking system in broadening and deepening the Islamic financial markets in Malaysia.
As the market becomes more complex and sophisticated, it must possess adequate infrastructure to enable the system to operate and function more efficiently and effectively. The Commission’s early initiative towards establishing infrastructure support is reflected in the setting up of a dedicated Islamic Capital Market Unit (ICMU) within its Market Policy and Development Division. The mandate of ICMU is to carry out research and development activities including formulating and facilitating a long-term plan to further strengthens the ICM in Malaysia.
To advice the Commission on Syari’ah matters pertaining to the ICM, the Syariah Advisory Council (SAC) was established in May 1996. Members of the SAC comprise of individuals who are in a position to present Syariah opinions and those who have vast experience in the application of Syariah, particularly in the areas of Islamic economics and finance.
Today, various capital market products are available for Muslims who only seek to invest and transact in the ICM. Such products include the list of the Commission’s Syariah Approved Securities, Islamic debt securities, Islamic unit trusts, Islamic and Syari’ah Indices, warrants (TSR), call warrants and Crude Palm Oil futures contract.