KembaraXtra-Islamic Finance-Islamic Capital Market-Exchanges Trading Islamic Capital Market Instruments

Jakarta Stock Exchange

• Acts as a holding company
• Lists more than 500 companies
• Trades:
– Sukuk
– Shari’ah-compliant equities
– Conventional financial products

Bursa Malaysia (MYX)

• Kuala Lumpur–based stock exchange
• Lists almost 1,000 companies
• Trades:
– Islamic securities
– Conventional capital market products

Labuan International Financial Exchange (LFX)

• Offshore exchange based in Malaysia
• Launched in 2000
• Operates 24/7
• Trades:
– Sukuk
– Islamic funds

London Stock Exchange (LSE)

• One of the largest stock exchanges in the world
• Owns the Alternative Investment Market (AIM)
• AIM includes Shari’ah-compliant firms
• Trades:
– Sukuk
– Equity funds
– Islamic exchange-traded funds (ETFs)

Luxembourg Stock Exchange

• First European exchange to transact Sukuk
• Sukuk represent:
– ownership of tangible assets
– projects
– businesses
– services
– joint ventures
• Trades:
– Sukuk
– Shari’ah-compliant funds

Nasdaq Dubai

• Serves:
– Western investors
– Middle Eastern investors
– European investors
– East Asian investors
• A leading Sukuk exchange in the Middle East
• Trades:
– Shari’ah-compliant stocks
– Islamic mutual funds
– Islamic ETFs
– Islamic real estate investment trusts (REITs)

Tadawul (Saudi Arabian Stock Exchange)


• Located in Riyadh
• Lists companies operating in:
– oil and gas
– food
– agriculture
– banking
– other financial sectors
• Trades:
– Stocks
– Islamic ETFs (IETFs)
– Mutual funds
– Sukuk


Understanding Shari’ah Screening

Meaning

• Shari’ah screening is the process of ensuring investments comply with Islamic law
• It applies to:
– stocks
– mutual funds
– ETFs
– Sukuk

Impact on Islamic Capital Market Growth

• Increased interest in Islamic capital market products has led to:
– growth in market capitalisation of Shari’ah-compliant stocks
– increase in Net Asset Value (NAV) of Shari’ah-compliant mutual funds

Key Driver of Growth

• High level of market confidence among:
– investors
– market participants
• Confidence is strengthened by:
– active Shari’ah governance
– participation of Shari’ah boards and scholars
– transparency and compliance assurance


Why Shari’ah Screening Matters

• Ensures investments are:
– free from riba (interest)
– free from maisir (gambling)
– free from gharar (excessive uncertainty)
• Builds trust and credibility in the Islamic capital market
• Encourages both Muslim and non-Muslim investors

One-Line Exam Summary

Shari’ah screening ensures that Islamic capital market instruments comply with Islamic principles, and strong Shari’ah governance has increased investor confidence, leading to higher market capitalisation and NAV growth.