SC seeks more regulatory collaborations on Islamic financial products

Written by Chong Jin Hun
Monday, 09 November 2009 23:45

KUALA LUMPUR: The Securities Commission (SC) is pursuing more strategic collaborations with global capital market regulators to expand the market base for local Islamic financial offerings.

SC chairman Tan Sri Zarinah Anwar said talks on potential mutual recognition agreements (MRA) with policymakers of major international financial hubs were ongoing to enable Islamic financial services providers to cross-sell Islamic collective investment schemes or funds with minimal regulatory intervention.

"We are in fact discussing with other jurisdictions to sign similar arrangements with them but this is still in progress," said Zarinah who spoke to reporters after signing an MRA with the Securities and Futures Commission of Hong Kong (SFC) today.

"As regulators, we can only build the regulatory bridge between our two markets. The onus is now on our intermediaries to quickly seize the opportunities that have now been made available to them," Zarinah said.

The signing ceremony was witnessed by Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah, and Hong Kong's permanent secretary for financial services and treasury Au King Chi.

The MRA with the SFC, which takes effect immediately, is the second agreement signed by the Malaysian regulator with a foreign peer. In March 2007, the Malaysian regulator entered into a similar deal with the Dubai Financial Services Authority.

Under the agreement with Hong Kong, Malaysian financial services companies are allowed to distribute their syariah-compliant offerings in Hong Kong while those regulated by the SFC would also be made available to Malaysian investors.

Both parties are also expected to collaborate on capacity building and information sharing on the development of legal and regulatory framework within the Islamic finance industry.

For now, it is believed that Malaysian syariah-compliant products have yet to make a presence in Hong Kong, where over 60% of US$755 billion (RM2.55 trillion) worth of fund management businesses are derived from overseas investors.

Looking ahead, Zarinah said the Malaysian Islamic finance fraternity would be able to leverage on Hong Kong's position as a gateway not only to China but also to other international financial hubs.

"For the Islamic capital market to thrive in the global arena, it needs a diversity of players with the courage and foresight to venture beyond national borders," Zarinah said.

Meanwhile, SFC chairman Dr Eddy Fong said the regulator hoped to see Malaysian Islamic finance players taking advantage of the newly established regulatory platform to market their syariah-compliant products in Hong Kong or use the financial hub as a springboard to the China mainland market.

"The SFC is committed to forging closer ties with overseas regulators that promote the same set of regulatory principles as we do, for the better development of financial industry across regions," Fong said.