KUALA LUMPUR (Feb 9): Bursa Malaysia Bhd has enhanced its Islamic Securities Selling and Buying - Negotiated Transaction (ISSBNT) framework.

The enhancement includes an “additional remedial option” which allows users to recall or acquire back the securities if the status of the ISSBNT eligible securities changes to shariah non-compliant, the exchange said in a statement.

The previous framework only allowed cash transactions settled via commodity murabahah or replacement with similar shariah-compliant securities as remedial options.

The additional remedial option entails instituting a grace period of seven market days to facilitate and provide an ideal window and sufficient time for securities transfers and transactions to take place, after taking into account the T+2 clearing and settlement cycle.

“The enhanced ISSBNT model was developed in response to industry’s demands to meet the needs of today’s dynamic investment and market landscape,” said Bursa Malaysia chief executive officer Datuk Muhamad Umar Swift.

“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 added.

ISSBNT is the world’s first shariah-compliant alternative to securities borrowing and lending, which the exchange 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.

To date, the Securities Commission Malaysia'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.

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.

https://www.theedgemarkets.com/node/654623