PROCESSES AND LEGAL REQUIREMENTS OF SELECTED PRACTICES ON PLATFORMS FOR TRADING OF FINANCIAL PAPERS AND THEIR INSTRUMENTS (ISSF 2016) Paper

 379
Year: 2016


1. Introduction

First of all, I have to admit that the topic given to me is very wide and it is very

challenging for me to even put a reasonable scope to the paper that can do justice to

the topic. At the end, I decided that I would focus on the processes and legal

requirements of certain selected practices on platforms for trading of financial

papers and instruments as regulated in Malaysia, more specifically, by the Central

Bank of Malaysia (BNM), Malaysian Securities Commission (SC) and Bursa Malaysia.

In general, the regulation for issuance of financial papers and instruments,

and their trading on the dedicated platforms in Malaysia, is shared between the

Malaysian Securities Commission and the Central Bank of Malaysia. The Malaysian

Securities Commission regulates the capital market varieties of the financial papers

and instruments; whilst the Central Bank of Malaysia regulates the banking and

money market varieties of those instruments. Since many of the financial papers and

instruments are also listed and traded on Bursa Malaysia, the rules and regulations

of Bursa Malaysia are applicable to those listed securities and must be accordingly

complied with.

The services and practices involving financial papers and instruments are

many and of diverse varieties. Accordingly, the related rules and regulations

governing these services and practices in term of their issuance and trading on the

various platforms are equally diverse and massive. It is not possible for me to

discuss all of these practices, and their processes and legal requirements. Therefore,

I intend to discuss some selected practices1 only, together with their related rules

and regulations. The selected practices are:

• Regulted Short Selling (RSS)

• Securities Borrowing and Lending (SBL)

The selection of these practices is made based on observation of aspects of the

practices that may raise some concerns in term of compatibility and compliance

with the Shariah principles. However, since the topic given to me is limited to

“processes and legal requirements of selected practices”, the paper will not go into

the details of Shariah and fiqhi discussions on the said practices. Only brief

highlights of possible Shariah concerns will be included, together with any available

fiqhi resolutions on the selected practices. The intention is to focus more on legal

rules and regulations (as required by the given topic), with some highlights of the

possible Shariah concerns in the selected practices so that further research or

review can later be done to ascertain their Shariah compatibility or otherwise.


 

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