Bursa Malaysia Annual Report 2014

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FROM THE BOARD OF DIRECTORS AND SENIOR MANAGEMENT
CEO’S MESSAGE AND MANAGEMENT DISCUSSION AND ANALYSIS
ISLAMIC AND ALTERNATIVE MARKETS
OUTREACH INITIATIVES
IAM leverages on Malaysia’s strength as a world leader in Islamic Finance and
aims to be the capital market of choice for global investors. As BSAS is a relatively
new trading platform, outreach programmes designed to educate and reach out
to participants are critical for its sustained development. To this end, we have
leveraged on Islamic finance and palm oil conferences, and workshops as well as
hosted our own events to get our message out. Our outreach initiatives in 2014
included the following:
1. Engaging Islamic Finance practitioners
We have made our presence felt in various Islamic conferences and events
throughout the year. Our goals at these events are to raise awareness
about IAM’s products and services, discuss strategy for enhancing Islamic
capital markets, explore new opportunities and solicit feedback from other
practitioners. Representatives from Bursa Malaysia were given opportunities
to speak at these events, among others:
a. 5th World Islamic Banking Conference – Asia Summit in Singapore
b. 1st International Conference on Islamic Wealth Management and
Financial Planning
c. IFN Asia Forum 2014
d. 4th Global Islamic Finance Forum
e. 11th Kuala Lumpur Islamic Finance Forum
f. 21st Annual World Islamic Banking Conference in Bahrain.
As previously mentioned, Bursa Malaysia has signed an MoU with the Saudi
Stock Exchange (Tadawul) and we are excited with this development, which
is aimed at helping cement the relationship and linkages of our markets
while enhancing the profile of Islamic finance.
2. Engaging Retail Investors
Retail investors are one of the focus groups for all of our outreach activities
and the same is true for IAM. In 2014, we attended and hosted special
events for retail investors designed to educate them about IAM offerings
as well as the advantages of Islamic investing. Our objectives are largely
guided by our vision to build a strong and vibrant Islamic capital market that
is relevant and actively participated in by the retail community.
Meanwhile, we organised workshops specific to the theme of Islamic
investing in 2014.These workshops also served to drive the country’s Islamic
Finance agenda forward by promoting Islamic financial management.
3. Engaging Institutional Investors and Intermediaries
IAM worked together with the Derivatives Market to sponsor events held by
the Palm Oil Refiners Association of Malaysia (PORAM) to further enhance
BSAS role in the palm oil industry. As BSAS is a commodities trading
platform, stronger linkages must be built with associations such as PORAM
to raise our relevance in the commodities industry.
We also worked on building linkages with intermediaries by recognising our
top BSAS trading participants at our Broker Awards Appreciation Dinner.
ENHANCING OUR MARKET STRUCTURE
We are constantly looking at ways to expand the role of our Islamic Capital Market
to support the growth of Islamic finance. We continued to make adjustments
throughout the year to provide industry players a regulated framework with
defined codes of conduct governing commodity trade in support of Islamic
interbank placements, client deposits and financing as well as sukuk issuances
using the concept of Murabahah and Tawaruq.
NEW PRODUCTS FOR IAM
1. Exempt Regime Sukuk
IAM listed two new exempt regime sukuks including Hong Kong’s maiden
sovereign sukuk of USD1 billion. The Hong Kong sukuk is based on the Ijarah
Structure and issued by Hong Kong Sukuk 2014 Ltd, which is wholly-owned
by the Government of the Hong Kong Special Administrative Region. Hong
Kong’s choice of Malaysia as the listing destination for its inaugural sukuk
is a strong vote of confidence in our market’s ability to raise the necessary
funds, and further reinforces Malaysia’s position as the global sukuk leader.
Meanwhile, Malaysia’s state investment arm Khazanah Nasional Bhd, via
its independent special purpose company Cahaya Capital Ltd, listed a
USD500 million Mudharabah-Murabahah exchangeable sukuk, which is the
first exchangeable sukuk to be based on the two combined Islamic principles.
Through its listing, the sukuk has set a benchmark for exchangeable sukuk
offerings, providing future issuers with greater options in structuring their
Islamic papers.
2. MyETF MSCI Malaysia Islamic Dividend Fund (MyETF-MMID)
In line with our goal to grow the ETF space in Bursa Malaysia, MyETF-
MMID, the second Shariah-compliant ETF, was launched. The listing of
MyETF-MMID gives our investors greater choice in ETF investments to
further diversify their portfolio. By the end of 2014, there were six ETFs
listed on Bursa Malaysia.
3. Third Government Guaranteed DanaInfra Nasional Bhd (DINB)
Exchange Traded Bonds and Sukuk (ETBS)
We launched the third series of the government guaranteed DINB ETBS in
2014, which is targeted at retail investors. The product allows investors to
benefit from the ongoing development of the MRT project, and functions as
a relatively safe investment asset due to the government guarantee. ETBS
is a relatively new asset class for us and we hope that the launch of this
product will encourage others to follow suit in future.
MOVING FORWARD
The government-led proposal to trade Malaysian Government Securities and
Government Investment Issues on the Exchange aims to strengthen the Islamic
financial market. The proposal is expected to promote domestic sukuk and
bond issuance and trading. Based on the Prime Minister’s announcement, the
government papers will be traded as ETBS if the proposal is approved. This move
will spur interest among retail investors keen on diversifying their portfolio by
investing in a relatively less risky asset with a constant yield.
Bursa Malaysia • Annual Report 2014 39