Securities Commission Malaysia Unveils Three Initiatives To Spur Innovation

The Securities Commission Malaysia (SC) will introduce a regulatory sandbox and enhance its regulatory framework to encourage securities tokenization to help spur innovations in the capital market.

Read also – Agility Global Invests in new MEA Venture Capital Fund

The SC will also be collaborating with Khazanah Nasional to explore the issuance of tokenized bonds. The three initiatives, unveiled at the SCxSC Fintech Summit 2024 starting today, are aimed at promoting responsible innovation in the country’s capital market. About 1,000 people are attending the two-day summit.

Read also – ADB Approves $200 Million loan to Spur Low-Carbon Transition in PRC Industrial Parks

In his opening address, the SC Chairman Dato’ Mohammad Faiz Azmi said the SC is committed to fostering a thriving fintech ecosystem in the capital market. “To drive innovation in the capital market, the SC is taking a holistic approach. Through initiatives like the regulatory sandbox and SCxSC, we enable industry experimentation and foster collaboration with the broader ecosystem,” he said.

Recognizing rapid technological advancements, the Securities Commission Malaysia has received several proposals that do not fully fit within existing regulatory frameworks. To address this, the SC is introducing a regulatory sandbox framework (sandbox), providing a controlled environment for testing innovative products and services while ensuring investor protection.

Corporations developing solutions in areas like financial inclusiveness, Islamic finance, and retirement solutions are encouraged to apply. The sandbox is a regulatory tool for enhancing policies to ensure they are fit for purpose. For example, it may allow innovative tokenized offerings to be tested within the sandbox, in line with the SC’s efforts to develop its technology-agnostic approach for tokenized securities and identify best practices.

In this respect, the Securities Commission Malaysia will develop guidance early next year for intermediaries to understand and manage the associated risks of securities tokenization. Corporations have until April 2025 to apply for the first cohort of the Sandbox.

Interested parties are required to participate in pre-consultation sessions before submission. These sessions are available immediately, and interested parties can begin engagements by emailing afinity@seccom.com.my.

Accepted applications will have up to 12 months to test their products or services. Eligibility criteria include offering innovative capital market products or services that are not currently available in Malaysia and do not fully fit under existing regulatory framework that bring value to the market.

In addition, the Securities Commission Malaysia is collaborating with Khazanah Nasional, as a potential issuer, to explore how blockchain technology can enhance the efficiency of bond issuance and operations. This initiative explores the use of smart contracts and custodial arrangements.

This year’s edition of the SCxSC Fintech Summit focuses on the use cases and opportunities of emerging technologies like artificial intelligence and blockchain in the capital market.

For the past 10 years, the Summit has served as a platform for fintech communities to engage, network, and explore fintech-driven opportunities.

Insights are delivered through an immersive experience of blending cutting-edge demos, roundtables, exhibitions, keynotes, and panel discussions.

The SCxSC Fintech Summit 2024 also featured the Demo Day of the SC FIKRA ACE Accelerator1 program, where 10 startups pitched for the chance to be selected as 2024 cohort’s winners.

SCxSC aligns with the SC’s broader innovation agenda to harness technology, supporting the Capital Market Masterplan 3 (CMP3) objectives of catalyzing economic growth, empowering investors and promoting a sustainable, inclusive stakeholder.

About Securities Commission Malaysia

The Securities Commission Malaysia (SC) was established on 1 March 1993 under the Securities Commission Act 1993 (SCA). We are a self-funded statutory body entrusted with the responsibility to regulate and develop the Malaysian capital market.

Our mission is “to promote and maintain fair, efficient, secure and transparent securities and derivatives markets; and facilitate the orderly development of an innovative and competitive capital market”.

The Securities Commission Malaysia has direct responsibility for rule-making, enforcing regulations about the capital market, ensuring sustainable market growth and development, supervising capital market activities and market institutions including the exchanges, clearinghouses, and registered market operators, and regulating all entities and persons licensed under the Capital Markets and Services Act 2007. Based on the SCA, the SC reports to the Minister of Finance, and our accounts are tabled in Parliament annually.