In an Islamic capital market (ICM) market transactions are carried out in ways that do not conflict with the conscience of Muslims and the religion of Islam. Here, there is assertion of religious law so that the market is free from activities prohibited by Islam such as usury (riba), gambling (maisir) and ambiguity (gharar).

The ICM is a component of the overall capital market in Malaysia. It plays an important role in generating economic growth for the country. The ICM functions as a parallel market to the conventional capital market, and plays a complementary role to the Islamic banking system in broadening and deepening the Islamic financial markets in Malaysia.

As the market became more complex and sophisticated, it needed supportive infrastructure so that the system could operate and function more efficiently and effectively. The SC's early initiative in setting up a dedicated Islamic Capital Market Department (ICMD) within its Strategy and Development Business Group was to provide the much needed infrastructure support. The mandate of the ICMD is to carry out research and development activities including formulating and facilitating a long-term plan to further strengthen the ICM in Malaysia.

The Shariah Advisory Council (SAC) was established in May 1996 to advise the Commission on Shariah matters pertaining to the ICM. Members of the SAC are qualified individuals who can present Shariah opinions and have vast experience in the application of Shariah, particularly in the areas of Islamic economics and finance.

Today, various capital market products are available for Muslims who only seek to invest and transact in the ICM. Such products include the SC list of Shariah-compliant securities, sukuk, Islamic unit trusts, Shariah indices, warrants (TSR), call warrants and crude palm oil futures contract.