Bursa Malaysia enhances Islamic securities selling and buying negotiated transaction framework

KUALA LUMPUR: Bursa Malaysia Bhd recently enhanced its Islamic Securities Selling and Buying - Negotiated Transaction (ISSBNT) Framework, the world’s first Shariah-compliant alternative to Securities Borrowing and Lending launched in December 2017.

In a statement today, Bursa Malaysia said the framework 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.

"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, while the previous framework only allowed transactions to be cash settled via commodity murabahah or replacement with similar Shariah-compliant securities as remedial options,” it said.

Bursa Malaysia said the Additional Remedial Option entails instituting a seven market days grace period 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.

However, in order for this option to apply, the exercise must be completed within seven market days from the effective date of the updated List of Shariah-compliant Securities by the Shariah Advisory Council of the Securities Commission Malaysia.

Bursa Malaysia chief executive officer Datuk Muhamad Umar Swift said the enhanced ISSBNT model was developed in response to the 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. - Bernama

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