Improving Operational Efficiency for the Industry

While the SC’s primary function is to preserve the integrity of a fair and efficient capital market, efforts continue to be made to ensure that we remain an efficient and effective regulator with a focus on continuous improvement. Following interactions with key market participants, several revisions were streamlined to make the SC’s processes and reporting more user-friendly.

Enhancing the Licensing Application System

On 22 March 2022, the SC launched the Electronic Application System (EASy) to replace the Electronic Licensing Application system, which served only Capital Markets Services Licence (CMSL) holders. Targeting both existing industry players and new capital market entrants under the SC’s licensing and registration regimes, EASy enables, among others, the automation of the submission and review process. With the new and enhanced features and functionality, EASy is envisaged to benefit both industry and internal users through greater operational efficiency, process simplification, and turnaround time improvement.

Facilitating Issuance Process Efficiency and Increased Flexibility for Issuance of Corporate Bonds and Sukuk

Effective 1 January 2022, the Guidelines on Unlisted Capital Market Products Under the Lodge and Launch Framework (LOLA Guidelines) facilitated an extended implementation time-frame for issuance of corporate bonds or sukuk for the first issuance under a programme or for a one-off issuance from 60 business days to 90 business days from the date of lodgement.

The extended implementation time frame has facilitated issuance process efficiency and provided greater flexibility to issuers to time their corporate bond or sukuk issuance based on market conditions.

Facilitating Post-Issuance Reporting for Bonds and Sukuk

In June 2022, the SC revised the LOLA Guidelines to enable more facilitative and streamlined post-issuance reporting to the SC for corporate bonds and sukuk. Concurrent with the issuance of the revised requirements under the LOLA Guidelines, the LOLA Online Submission System was enhanced to facilitate this streamlined reporting process.

The streamlined post-issuance reporting for corporate bonds and sukuk have supported principal advisers and the relevant responsible stakeholders in enhancing their operational efficiency.

Mitigating Systemic Risks And Promoting Financial Stability

Enhanced Risk Governance Framework

In 2021, the SC-wide risk governance framework was enhanced as part of an overall initiative to have an effective integrated and predictive risk surveillance to maintain regulatory agility.

The structured risk governance framework integrated the wider spectrum of risks such as technology, cyber and conduct risk at the SC’s Systemic Risk Oversight Committee (SROC) and Accounting, Market and Corporate Surveillance Committee (ACMS).

Intensified surveillance

The SC continued to intensify its surveillance of systemic risk to maintain market resilience and stability. Regular SROC engagements were held to deliberate concerns emanating from various segments across the capital market. Domestic equity and bond market, foreign fund flows and trade participation continued to be monitored closely for potential stress points.

In addition, measures and economic stimulus packages introduced by the government to weather the impact of COVID-19, market trading conduct and the financial position of listed companies were among the focus areas for discussion.

Thematic assessments

The SC also conducted thematic assessments covering investors’ fund flows, the position of firms, and policy decisions to ascertain the possible impact on the capital market. In 2021, the SC reviewed and enhanced its crisis indicators on potential emerging risks in the
capital market.

The enhanced crisis indicators provided a reference point for escalation to SROC when the identified indicators and triggers materialised and ensured prompt response to manage and prevent any issues of concern that might lead to a systemic crisis.

Joint regulatory discussions

In 2021, the SC conducted frequent joint regulatory discussions with other authorities such as Bank Negara Malaysia (BNM) and Labuan Financial Services Authority (Labuan FSA) to identify systemic risk concern areas within the financial and capital markets in Malaysia.

Monitoring of various components of the capital market

The SC continued its efforts to undertake a methodological and integrated approach to ensure any potential systemic risk was being monitored, mitigated, or managed. Figure 1 highlights the findings from the following risk assessments on the various components of the capital market.