<![CDATA[Indonesia’s Islamic capital market has grown rapidly, yet evidence on how effectively its governance framework sustains market stability and investor confidence remains scattered. This study assesses the framework built on the Financial Services Authority, the National Sharia Council of the Indonesian Ulema Council, and the Indonesia Stock Exchange. It uses a descriptive-comparative qualitative library research design drawing on regulations, fatwas, institutional reports, and scholarly literature. It evaluates effectiveness across three dimensions: market stability, investor confidence, and legal certainty, and compares it with Malaysia’s framework. The findings indicate that the three-pillar framework has established multi-layered compliance mechanisms, namely the Sharia Securities List, Sharia Experts in the Capital Market, and Sharia equity indices, further strengthened by the 2025 regulation governing the list. Evidence on stability is mixed: the Jakarta Islamic Index remained relatively stable over the medium term during the pandemic, but its risk and return did not differ significantly from a conventional blue-chip index, and the volatility of the Indonesian Sharia Stock Index was not lower than that of Islamic indices in other countries. Investor confidence has strengthened, with the number of Islamic equity investors rising from 169,397 in 2024 to 217,157 in December 2025, although literacy and inclusion in the Islamic capital market remain very low. Fatwas gain binding force through regulation rather than through mandatory court referral, as is the case in Malaysia. The framework establishes a foundation for compliance and confidence, but its causal effect on stability remains unproven. The study recommends strengthening the legal certainty of fatwas, implementing targeted literacy programs, and conducting data-driven regulatory impact assessments.]]>
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