Malta Stock Exchange to launch new Islamic Index
February 11, 2016
Malta Stock Exchange (MSE) is set to launch an Islamic Index on 8 February. The Index will be available on the exchange’s website www.borzamalta.co.mt, and a full list of component companies will also be made available on the website, according to Eileen Muscat, Chief Executive Officer of MSE.
The growth of Islamic finance globally as well as in Malta contributed to the decision to launch the index, according to Muscat. “The financial services sector in Malta have developed significantly in recent years and now enjoys a strong international presence through the provision of many cost effective and very professional services,” said Muscat. “The Islamic finance sector is an important area which is seen to have huge potential to create a specific niche market. While Islamic Finance has been discussed for a number of years and a number of initiatives have been taken by market players, the Exchange has taken a very visible and concrete initiative by creating and supporting an Islamic Finance Equity Index, giving a clear message of its interest in developing this important market in Malta.”
In the eyes of Muscat, a number of factors make Malta an ideal location for such an index. “Gauging the right time to launch something like this new Index is certainly never easy and is dependent on many factors. Certainly this initiative is part of the Exchange's overall strategy to seek international business which we believe is our next stage of development. We believe that Malta's multi-disciplinary financial sector, its ‘“can do’ and ‘open for business’ attitude, its close cultural and geographical position and EU membership, make it an ideal place to attract this business to our shores.”
Though Malta does have a Muslim population, it is not the main contributing factor to the launch of the Index. “Whilst there is a significant Muslim community in Malta, we do not see this as being viable on its own, and would need a much stronger international presence in order for Islamic finance to develop properly,” said Muscat.
The MSE will furthermore be reaching out directly to potential issuers through a number of road shows that will take place over the course of this year, according to Muscat. “We would need to promote our services in this regard, and will be doing so in Dubai, and other places over the coming months, and more so if and when the Sukuk structure is in place.”
Muscat added that the current regulatory framework does not impede equity listings. “The equity part of the Islamic finance project is relatively straightforward in that equity issuance does not raise any particular legal or regulatory issues.”
The MSE hopes to attract Halal companies that have not previously listed with the exchange. “Besides the equities that have been certified to be compliant, and will form part of the new Index, we would welcome new international companies seeking to list their Islamic compliant equity in Malta. In fact, the Exchange itself has entered into an agreement with an Islamic Scholar to ensure the continued compliance of the component companies within the Shari’ah Index as well as to ensure compliance of new companies coming to the market,” said Muscat.
The MSE has effectively cleared the way for a Sovereign Sukuk issuance from the Republic, and now work is being done from all sides in order to explore that option. “The Government of Malta has declared it is studying the possibility of issuing a Sovereign Sukuk, since this would also give a clear message about our plans in this regard. The Exchange and other practitioners are currently working together to develop a business case in this regard, and to give advice on any legal and regulatory amendments that may be required,” said Muscat. “We would need to amend some parts of legislation and regulations, but if the new Index shows interesting results and potential for new business, then this would be an encouraging development and would certainly create the momentum to take this next step.”