The court’s adjudication role in Islamic finance is reinforced by the support from the SAC in its capacity as a consultative body to the Malaysian judiciary system. Under the law, the Central Bank of Malaysia Act 2009 prevails, if a question concerning a Shariah matter arises in any proceedings relating to Islamic financial business, where the court or the arbitrator shall take into consideration any published rulings of the SAC or refer the matter to the SAC for its ruling. The SAC’s rulings are binding on the courts and arbitrators. This referral system preserves and enhances the sanctity of Shariah rulings and the consistency in the interpretation and application of Shariah principles in Islamic financial transactions. To complement the court system, specific arbitration rules for Islamic banking and financial services have also been developed, enabling disputes for both domestic and international cases to be dealt with by the Kuala Lumpur Regional Centre for Arbitration (KLRCA). Such comprehensive legal infrastructure for Islamic finance is unique to Malaysia and essentially reflects the support and dedication by the legal fraternity in keeping abreast with the development of Islamic finance. Adding to the strength of the institutional and legal framework in Malaysia is our continuing emphasis on human capital development. Various measures have been implemented to ensure that our market players, including the judges and lawyers, are well-trained in Islamic finance.
Indeed, the Commission’s proposal allows for a faithful implementation of the final Basel 3 standards, as agreed at the international level, while taking into account EU specificities and avoiding material increase in capital requirements. As negociations are underway, at the ACPR we see merits in sticking to the following: First, the implementation of the Output floor at the European consolidated level, consistently with the Banking Union which is now almost complete. Second, that the few targeted  adjustments, on critical and strategic exposures for the financing of the EU economy which are transitional in nature, remain so. This concerns both the low-risk exposures on residential real estate and the exposures to unrated corporates. The transitional period is planned to end on 31 December 2032, which will give sufficient time for European banks to absorb the impact of the output floor, through organic capital generation, and for the market to ensure a larger coverage of ratings for EU companies. Another pragmatic measure proposed by the Commission that we strongly support at the ACPR is the introduction of a mechanism that would allow the Commission to adjust rapidly in reaction to international developments on the calendar or the content of key elements of the standard, in particular for market risk activities. This would provide some necessary flexibility for these activities exposed to international competition, as Europe continues to be a front-runner regarding the transposition of the final Basel 3 standards.