Islamic Capital Market is all activities in capital market that comply with Islamic principles. Indonesia Islamic Capital Market is part of Sharia Financial Industry regulated by Financial Services Authority (OJK), particularly in directorate of sharia capital market.
The historical milestone of Indonesia's Islamic capital market began with the issuance of the first sharia mutual fund in 1997. This was followed by the launch of the Jakarta Islamic Index (JII) as the first sharia stock index, consisting of the 30 most liquid sharia stocks in Indonesia, in 2000. In 2001, DSN-MUI issued Fatwa number 20 on Guidelines for The Implementation of Investments for Sharia Mutual Funds and in 2003, DSN-MUI issued Fatwa number 40 on Capital Market and General Guidelines for the Application of Sharia Principles in the Field of Capital Market. OJK regulation (at that time still Bapepam and LK) on Islamic capital market was first issued in 2006 and continued with the issuance of Sharia Securities List (DES) in 2007. List of Sharia Securities (DES) is a guide for market participants in choosing stocks that meet sharia principles.
The era of the rise of Indonesia's sharia capital market began in 2011 when many innovations were launched into the market including the Indonesian Sharia Stock Index (ISSI), Fatwa DSN MUI No. 80 on the Application of Sharia Principles in the Mechanism of Equity Securities Trading in the Stock Exchange Regular Market, and Sharia Online Trading System (SOTS). SOTS is the first system in the world developed to facilitate sharia investors in conducting stock transactions in accordance with Islamic principles.
Since the moment of the revival, Islamic Capital Market is perceived to have new energy to continue to grow so as to consistently set new milestones, including:
- Launch of the first Syariah Customer Fund Account (RDN) in 2013;
- Launch of the first Roadmap of Islamic Capital Market and establishment of the first Sharia Investment Gallery (GIS) in 2015;
- IDX first received the international award of The Best Supporting Institution in Islamic Finance from GIFA in 2016;
- Launch of the First Stock Zakat and Launch of Jakarta Islamic Index 70 (JII 70) in 2017;
- Launch of the First Stock Waqf, the launch of fatwa DSN-MUI No.124 related to sharia conformity in Storage and Settlement Services in KSEI, and IDX first won The Best Islamic Capital Market Award from GIFA in 2019;
- Furthermore, in 2020, to further improve the foundation of sharia compliance in the capital market, DSN MUI issued Fatwa No. 135 on Shares and Fatwa No. 138 related to sharia compliance in the Clearing and Guarantee Mechanism at KPEI.
The institution that regulates the implementation of Islamic principles in the Indonesian Capital Market is the National Islamic Board of the Indonesian Ulama Council (DSN-MUI) in the form of issuing fatwas that related to investment activities in the Indonesian Islamic Capital Market. The first fatwa about the Islamic capital market that was issued by DSN-MUI in 2001 was fatwa No. 20 regarding the issuance of the Islamic Mutual Funds. In 2003, DSN-MUI issued fatwa No. 40 regarding the capital market and general guidelines on the implementation of Islamic principles in the capital market. Then in 2011, DSN-MUI issued fatwa No. 80 concerning The Implementation of Islamic Principles in The Equity Trading Mechanism at The Stock Exchange's Regular Market.
In order to apply the implementation of Islamic principles in the Indonesian capital market to be more binding and have legal certainty, OJK convert the Islamic principles in the Indonesian capital market into OJK regulation No. 15/POJK.04/2015 regarding the implementation of Islamic principles in the capital market.
OJK has arranged about the Akads (contracts) that can be used in every issuance of Islamic securities in Indonesia capital market through OJK regulation No. 53/POJK.04/2015. However, basically all of the Akads that fulfill Islamic principles can be used in the issuance of Islamic securities as long as they are not contradictory to the OJK regulations that apply. The Akads that can be used in the issuance of Islamic securities in Indonesia capital market according to the regulation is the contract ijarah, istishna, kafalah, mudharabah, musyarakah and wakalah.