On 29 September 2022, the Securities and Exchange Commission (“SEC” or the “Commission”) issued an exposure draft of the New Rules on Shariah Advisory Services for Non-Interest Capital Market Products (the “Draft Rules”). The Draft Rules have been issued further to the Commission’s efforts to promote transparency, while creating a level playing field for all participants in the non-interest capital markets.
The Draft Rules outline the procedure for the appointment of Shariah Advisers, criteria for the registration of Shariah Advisers, renewal of registration, responsibilities, and role of Shariah Advisers. In this issue, we highlight certain impactful provisions of the Draft Rules in relation to Shariah advisory services for non-interest capital market products and services.
Highlights of the Draft Rules
Who is a Shariah Adviser?
Under the Securities and Exchange Commission Rules 2013 (as amended) (the “SEC Rules”) a Sharia adviser could be (i) a fund manager registered by the Commission to manage an Islamic fund or (ii) a bank licensed for non-interest (Islamic) banking, or any institution licensed by a relevant regulator to offer Islamic financial products. The Draft Rules in its present form has proposed definition of a Shariah Adviser as “an independent professional (individual or corporate) trained as Shariah scholar, or, in the case of a corporation, an entity with a minimum of 2 (two) employees who are trained as Shariah scholars, registered by the Commission to advise and/or provide certificates of compliance in connection to products and services provided by financial institutions For a person or entity to be recognised as a Shariah Adviser eligible to provides services in relation to Islamic products and services, such a person or entity must be duly licenced by the Commission”.
Analysis of the Securities and Exchange Commission Exposure Rules on Shariah Advisory Services for Non-Interest Capital Markets Products – Click Here To Download The Full Publication