Zeti Akhtar Aziz: New platform to serve the Islamic financial industry
Keynote address by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the
launch of Bloomberg's Enhanced Islamic Finance Platform, Kuala Lumpur, 21 February 2011.
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It is my pleasure to join you this morning at this Launch of the Bloomberg Enhanced Islamic
finance platform. This development is timely as Islamic finance is envisioned to continue to
make great strides in this new decade. Such an information platform is an important element
for the more efficient functioning of the Islamic financial markets in the international financial
system. In this recent ten years we have seen significant developments in Islamic finance in
both our domestic and the international financial system. In this more challenging and
uncertain environment, Islamic finance has demonstrated its resilience and viability and has
sustained its growth momentum.
Today, with the increasing internationalisation of Islamic finance, its continued growth and
expansion will very much depend on extensive information which can be efficiently accessed.
Bloomberg has for two decades been serving the Islamic financial community providing
access to news offerings and timely data and information. The initiative today to enhance its
Islamic finance platform is thus a highly welcomed development. The seamless flow of
information in the Islamic financial markets is integral to facilitate the efficient price discovery
process and maintain the vibrancy of the Islamic financial industry. Data and news that
transcends boundaries in real time are important for not only investors and financial
institutions but also for researchers and scholars in Islamic finance. It will contribute towards
enhancing competitiveness, product innovation and strengthen the international financial
inter-linkages.
As we enter this new decade, the challenge for the world is to sustain the economic
recovery. While there continues to be many problems still to be addressed in the developed
world, most emerging economies have continued to do well. In Malaysia, our economy
recorded a strong growth of 7.2% in 2010 driven by strong domestic demand and our
stronger economic and financial linkages with other emerging economies. An important part
of this recovery is the strong recovery in private investment as capacity utilisation increases
and as the dynamic nature of our economy presents new investment opportunities in new
growth areas.
For the Islamic finance industry, the year 2011 is set to be an exciting period. The global
sukuk issuance in the year 2010 surpassed that of the previous year by more than 20 per
cent. Against this positive growth, renewed confidence of investors and issuers is evident. In
2011, the sukuk issuance is projected to surpass the level recorded in 2007 when it
sustained the highest level of issuances. The year 2010 also saw Malaysia's evolution as a
multi-currency sukuk origination platform with four foreign currency sukuk issuances
amounting to about USD3 billlion. This trend will benefit from the Bloomberg AIBIM Bursa
Malaysia Sovereign Shariah Index (BMSSI) developed by the Association of Islamic Banking
Institutions Malaysia (AIBIM), Bursa Malaysia and Bloomberg that is also being launched
today as part of the enhancement in the Islamic finance platform.
The launch of this ringgit sukuk index marks another significant milestone in the Malaysian
Islamic financial environment as it measures the performance of ringgit denominated Shariah
compliant government securities in addition to the benchmarking purposes. This
development has been part of the continuous support by AIBIM and Bursa Malaysia to
further strengthen Malaysia's position as a leading sukuk market in the world. The
collaboration between AIBIM, Bursa Malaysia and Bloomberg is also expected to see a
ringgit corporate sukuk index in the offing. Moving forward, efforts are underway between
Bank Negara Malaysia and Bloomberg to broaden this initiative to develop a foreign currency
sukuk index. The liberalization of our financial markets is expected to attract more such
foreign currency sukuk issuance by sovereign entities, multilateral institutions and
multinational corporations.
In further strengthening the infrastructure for the sukuk market, the Malaysian Electronic
Clearing Corporation or MyClear, a wholly-owned subsidiary of Bank Negara Malaysia that
operates the country's real time gross settlement system and securities depository system, is
also undertaking an initiative to promote cross-border financial transaction that is efficient,
reliable and secured. This initiative reflects our commitment towards financial integration in
the ASEAN region and the global financial system through closer linkage with other central
securities depositories, namely Euroclear and the Central Moneymarkets Unit (CMU) of the
Hong Kong Monetary Authority. It is expected that other central securities depository will
participate in this initiative to heighten this cross-border linkage. MyClear is thus set to be
one of the key multilateral settlement platforms that will facilitate sukuk trading transactions.
The implementation of this initiative which is scheduled to be completed in the second half of
2011 offers cost-effective access for foreign investors to invest in Malaysian securities
deposited with MyClear. At the same time, it will enable Malaysian investors to invest in
foreign securities deposited with international and regional central securities depositories
institutions. Moving forward, MyClear will continue to expand its horizon to other regions
across the world.
Another infrastructure development that is taking shape in the international Islamic financial
system is the establishment of the International Islamic Liquidity Management Corporation
(IILM). Launched in October 2010, the IILM has begun its operations in Kuala Lumpur on the
1st of February. Its main task is to issue short-term multi-currency liquidity instruments to
facilitate the cross-border liquidity management between financial centres and at the same
time enhance the financial inter-linkages. The IILM is scheduled to roll out the issuance of
liquidity instruments later this year. This will allow for more efficient management of financial
flows across borders and thus contribute towards the efficient internationalisation of Islamic
finance.
As the Islamic financial community significantly grows in size, it is congruent that this
enhanced Islamic finance platform being launched today has widened its outreach to the
subscribers globally and from contributors of data and information from institutions around
the world. To support this new enhanced Islamic finance platform, Bank Negara Malaysia
and the other community members under the MIFC initiative is pleased to be one of the
contributors. The MIFC page in the enhanced platform provides insights on Shariah, MIFC
business opportunities and key developments. It also hosts the extensive network of Islamic
financial community in Malaysia.
On this note, I wish to congratulate Bloomberg, AIBIM, Bursa Malaysia and the many teams
that worked on this initiative to serve the Islamic financial industry.