zeti akhtar aziz : benchmark market indices - milestones in financial market progress speech by dr zeti akhtar aziz, governor of the central bank of malaysia, at the launch of citigroup malaysian government bond index & dow jones - rhb islamic malaysia index, “ benchmark market indices - milestones in financial market progress ”, kuala lumpur, 23 june 2005. * * * yang berbahagia dato'sri sulaiman abdul rahman taib, executive chairman, rhb capital, dr. zaha rina zahari, chief executive officer, rhb securities, mr. piyush gupta, country officer and chief executive of citibank berhad, distinguished guests, members of the media and ladies and gentlemen, " the use of benchmark market indices emerged on the financial scene as early as in the 1880's. in 1884, charles dow, journalist and founder of dow jones & company produced the first dow jones index, published in the company's'customer afternoon letter'which was later to become the wall street journal. of what we know, charles dow had always been a keen market observer. the haphazard idiosyncratic price movements of shares of individual or group of companies indeed did not lend itself to a coherent assessment of the performance of the market nor enable any meaningful analysis of market direction and investors'inclinations. this gave rise to the need for an index that reflects the broad market performance and investors'interest. this first market index was simple. prices of 11 stocks, the most actively traded on the new york stock exchange, were averaged. charles dow himself chose these stocks, nine of them being railroad companies, the key growth industry at the time. over time, he would revise the index as he saw appropriate to be reflective of ongoing market and industry developments. ladies and gentlemen, the construction and use of benchmark market indices today has undergone much advancement since then. indeed, financial markets have undergone dramatic transformation. economic, industry, and corporate expansion ; the sophistication, proliferation and diversity of instruments ; the expanding investment communities are all factors that have led to an increase in the number of benchmark indices and their greater use. benchmark committees deliberate over the construction of the index and determine the rules of the benchmark. investors need the benchmark indices to be used as performance indicators of the broad market and for an indication of the market direction and investors'sentiment on the corporate sector

assistance. allow me to now share malaysia ’ s experience in the development of the sukuk market in our islamic finance marketplace. the islamic capital market in malaysia has been systematically developed to ensure accessibility whilst ensuring the protection of investors and efficiency in the intermediation process. the initiatives to develop the market are also strongly backed by the legal and shariah framework which is further supported by a robust financial infrastructure, including the settlement and bond information system that enables malaysia to provide a complete sukuk issuance and trading platform. since the first sukuk issuance in 1990 by a multinational corporation in malaysia, the sukuk outstanding in the malaysian marketplace is now us $ 158 billion. in 2002, the malaysian government issued its inaugural global sovereign sukuk, raising us $ 600 million, which became an international benchmark for the issuance of global sovereign sukuk. the marketplace has now been liberalised to allow for multilateral financial institutions, multinational and national corporations from other jurisdictions to issue both ringgit and nonringgit denominated sukuk in our sukuk market with increasing foreign investor participation in such issuances the sukuk market in malaysia has seen wide ranging innovative structures and a greater diversity in the type and maturity of the sukuk. a landmark issuance is the us $ 750 million exchangeable sukuk musyarakah in 2006 by khazanah, the government ’ s investment corporation for the purpose of selling a stake in telekom malaysia. it marked the first issuance of its kind, incorporating full convertibility features common to conventional equitylinked transactions. a further notable issuance was the pioneering retail exchange - traded sukuk to raise funds for a transportation project that allowed retail investors the opportunity to have direct access to the sukuk and thus a stake in a massive infrastructure development in the country, therefore broadening the range of low - risk investment products available to such investors. in terms of maturity, the ringgit sukuk market has seen issuances of maturities to 30 years which were well received by the financial market. regular sukuk issuances with different maturities by the malaysian government has also created a benchmark yield curve for market reference, of which is complimented by the establishment of a number of indices for non - ringgit and ringgit denominated sukuk that serve as benchmarks to track the performance of sukuk. these initiatives have progressively contributed towards creating a