The Islamic Capital Market Essay example

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1. Introduction The purpose of this report is to learn about the development of Islamic capital market. Islamic capital market is a growing and important sector in Islamic financial system. It has been developed since a few decades ago led by Malaysia. Even though it has been develop, many issues and challenges arise in order to align with the perfect Islamic capital market. In contrast, with the challenges they face, it lead to a very bright future of Islamic Capital Market. Regardless of the name Islamic, every products in Islamic capital market is provided for every single individual either Muslim or non-Muslim. The products is evolved and emerged from conventional capital market instruments to be aligned with Shariah. For…show more content…
As the Islamic capital market grows, there are distinct structure between Malaysia and Middle East country. Of course the most distinct structure is currency of issuance as in Malaysia, the issuance of Islamic capital market is in Malaysian Ringgit (RM) while Middle East country issues in US dollar. Malaysia Islamic capital market structure regulators are open to a wide variety of structures to enable unsecured issuance while Middle East country Islamic capital structure is less variety due to more strict interpretation of Islamic law. Malaysia ICM rating requirement is essentially to get rating from local rating agency but Middle East country on existing international rating. 3. The Issues and Problem arise in Islamic capital market 3.1 Issues in Products The existing products are not necessarily contributing to the healthy growth of capital markets. For example, many of the sukuk structures do not conform to the Shariah standards outlined by Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). Moreover, these products are mostly directed attracting investment from banks which are less open to risk taking or innovation and more comfortable in adhering to their practices, procedures and product structures. Common individual investors and other non-bank institutions who look forward to genuine Islamic products and have wider range of risk appetite are not the target of product design because
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