Research Question Research Objectives

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2.1.2 Islamic Capital Market and Islamic Stock

The Islamic stock market can be considered one of the important branches of the Islamic capital market whereby its components and activities are based on Islamic law, which is based on venerable sources and approved by the Fiqh Ulama Securities Commisions, 2008. According to Islamic Capital Market Task Force report which published by IOSCO in 2004, islamic capital market means where investment and financing activities and products are structured in accordance with Shariah SULQFLSOHV´XUVD Malaysias definition is taken from The Islamic Capital Market, p. 2: The Islamic Capital Market ICM refers to the market ZKHUH DFWLYLWLHV DUH FDUULHG RXW LQ ZD\V ZKLFK GRHVQ¶W FRQIOLFW ZLWK WKH principles of Islam. The ICM represents an assertion of religious law in capital market transactions where the market is free from prohibited activities and elements such as riba ¶maisir and gharar. In classical Islamic literature, there is no terminology of investment in capital market but, as an economic activity, transaction in capital market can categorized as trading activity al-Bay. So that, to know the permitted of investment in capital market we must know the islamic law in trading activity. According to Bapepams rule no. IX.A.13 concerning the issuance of islamic securities the definition of islamic principles in the capital market is The principles of Islamic law in the capital market activities by the National Sharia Board fatwa Indonesian Ulema Council DSN-MUI, both DSN-MUI fatwa specified in the regulations CMFISA or DSN-MUI fatwa issued prior to the the adoption this regulation , along the fatwa is not in conflict with this rule and or Bapepam-LK others based on DSN-MUI fatwa .As far known, sharia capital market in Indonesia is associated to the Jakarta Islamic Index JII, which only composed of 30 sharia ϭϯ securities listed in Indonesia Stock Exchange IDX, whereas Sharia Securities existed in the Indonesian Sharia capital market are not only consists of 30 shares that become the constituents of JII but also consists of various types of securities besides Sharia Stocks such as Sukuk and Sharia Mutual Fund. Since November 2007, Bapepam-LK has issued Sharia Securities List which contains a list of Sharia Stock in Indonesia. With the DES, the people will be more easy to know what kind of shares are included in Sharia Stock because DES as the only reference for Sharia Securities in Indonesian. The Presence of DES followed by IDX to launch Indonesia Sharia Stock Index ISSI on May 12, 2011. ISSI constituency consists of all Sharia Stock listed on. In the same years, precisely March 8, 2011, DSN-MUI has issued fatwa No.80 concerning The Implementation of Sharia Principles in The Equity Trading Mechanism at The Stock Exchanges Regular Market. In the presence Fatwa, it should be able to increase the public confidence that sharia investment in capital market was appropriate with sharia principles as long as it meet the criteria with specified in fatwa Dewan Syariah Nasional MUI, 2011. As a follow up to the issuance of fatwas, BEI has developed a model of online trading which appropriate with sharia principles to be applied by IDX members on september, 2011. With the presence of this system, the development of sharia investment in capital market is expected to increase because the investors will be more easy and convenient to make sharia transaction.