In view of the rising interest of countries in the Islamic capital market system, the International Organisation of Securities Commission has directed regulators across the world to ensure full disclosure practices.

According to the organisation, the call is coming as a result of the increasing significance of Islamic capital market, especially in view of the rising cross-border transactions.

A statement from IOSCO on Wednesday noted that the growing recognition of the increasing significance of the Islamic capital market, especially in view of rising cross-border transactions, had triggered the need for stronger oversight, greater transparency and more robust disclosure requirements.

Thus, according to the statement, the organisation has announced that it is considering setting up a regulatory standard for global capital markets, stipulating the proper disclosure requirements for Islamic capital market products.

The Chairman of the Securities Commission of Malaysia, Mr. Datuk Singh, said, “As the Islamic capital market expands and becomes more global, it is increasingly important that issues surrounding investor protection and market integrity are addressed from a cross-jurisdictional perspective.

“It is, therefore, critical for regulators and standard-setters such as the Islamic Financial Services Board, IFSB, and IOSCO to further examine disclosure regimes for Islamic capital market products, with a view to allowing more informed investment decision-making and to promote the further growth of the Islamic capital market.”

Singh who is also an IOSCO board member and the Vice-Chair of the IOSCO Emerging Markets Committee, said that this was due to the increasing significance of the Islamic capital market, especially in view of rising interest in transactions across borders.

The Secretary General, Islamic Financial Services Board, Mr. Jaseem Ahmed, explained that promoting cross-border financing and investment through Islamic finance was critical to attaining the depth and scale in Islamic capital markets needed to be competitive.

He said, “This will require the adoption of robust regulatory and disclosure practices that give confidence to investors and consumers alike.

“IFSB hopes that this collaboration with IOSCO will facilitate a process leading to a set of practices that could be harmonised or mutually agreed upon.”

On his part, the Secretary General, IOSCO was quoted in the statement as saying, “The recent financial crises highlighted the importance of sound disclosure regimes in mitigating systemic risk and building confidence in the financial markets.

“Given the tremendous growth of the Islamic finance industry – an increasingly important segment of the global financial markets – it is essential to achieve greater harmonisation in disclosure requirements across jurisdictions where Islamic capital market products are offered.”

The Nigerian Stock Exchange had, a couple of weeks ago, partnered Lotus Capital, to launch the NSE Lotus Islamic Index, designed to track the performance of Shari’ah compliant equities on the floor of the NSE.

Source: Punch/Udeme Ekwere