The capital market is an increasingly important source of financing in Malaysia. This is evident in the increasing size of equity market, bond market and banking sector in this country. The same trend is observed in the Islamic Capital Market sector. Over the last decade, the Islamic capital market has seen significant growth and efforts to further unlock these funds are ongoing. One of the main thrust in the development of Islamic Capital Market is Shariah compliance. This paper intend to examine the process of securities screening undertaken by the Securities Commission of Malaysia. The discussion will begin by highlighting brief development of the Islamic Capital Market in Malaysia. It will then examine the different steps in the screening process, which involve the quantitative and qualitative phase. The different process in the quantitative phase, which begins with the extraction of relevant financial information from audited financial report and other material information, and the Shariah compliance review process to identify contribution from non-permissible activities will be elaborated. In addition, the paper will explore the criteria and the benchmark used in the process and will elaborate the Fighi justification for such benchmark. The paper will also provide three case studies to show how the quantitative part is concluded.
