First syariah alternative to securities borrowing and lending launched

KUALA LUMPUR: Bursa Malaysia yesterday launched the world’s first syariah-compliant alternative to Securities Borrowing and Lending (SBL).

Chief executive officer Datuk Seri Tajuddin Atan said the framework known as the Islamic Securities Selling and Buying Negotiated Transaction (ISSBNT) would ensure that Malaysia remained the world’s leading fully-integrated Islamic investing marketplace, offering a complete set of Islamic financial instruments.

“The ISSBNT is designed based on the conventional SBL Negotiated Transaction (SBLNT) framework, which was built on syariah principles for parties to undertake transaction with similar outcome to the conventional SBL transaction,” he told reporters at the launching ceremony yesterday.

Tajuddin said the SBLNT was chosen as a preferred model in developing ISSBNT because of it’s flexibility which allowed terms to be negotiated by the parties concerned.

The ISSBNT is designed based on the conventional SBL Negotiated Transaction (SBLNT) framework, which was built on syariah principles for parties to undertake transaction with similar outcome to the conventional SBL transaction. Datuk Seri Tajuddin Atan, Bursa Malaysia chief executive officer

“Although demand for an Islamic SBL was currently domestic-driven, we believe there is a growing interest, globally, for this facilitation because Malaysia has a niche and over 30 years experience in Islamic finance, started by the Bank Negara Malaysia.

“The difference in ISSBNT is that you need to sell and then you buy back the securities, it is not a lending process which involves interests like in the conventional SBL,” said Tajuddin.

He also said that 61 per cent of the local stocks were currently syariah-compliant, hence the reason why it was timely to introduce an Islamic syariah-compliant version.

“In the first year alone, I hope we can get an uplift of around five to 10 per cent (growth in funds transaction) from the current base of zero.

“The gestation period would take about 12 months as we need to educate the market and identify the players - lenders, borrowers, marketers and so on.

“A lot of work needs to be done but this is an important ecosystem to grow the market,” said Tajuddin, adding that the SBLNT grew remarkably, over the last five years, from RM400 million in 2012 to RM4.7 billion in 2017. — Bernama

Tajuddin (third left) and Chairman of Syariah Committee of Bursa Malaysia Prof Dr Ashraf Md Hashim (third right) during the Launching of Islamic Securities Selling and Buying Negotiated Transaction. Also present are (from left) Bursa Malaysia chief...