Facilitative and Inclusive Ecosystem

The SC holds steadfast to the principle that an open and engaging regulator is essential to the development of effective and efficient capital market policies. As such, the SC continued to cultivate a facilitative and inclusive financing ecosystem for all, in line with efforts to foster a more developed Malaysian capital market.

Mobilising Capital for Private Markets
Facilitating the growth of private markets is essential to the SC’s aim of promoting financial inclusion and increasing the breadth and depth of the domestic capital market. The SC has engaged extensively with private and public stakeholders alike to develop the alternative financing space in Malaysia as a key complement to public markets.
The SC, in collaboration with its affiliate CMM and MDEC, organised a series of corporate venture capital (CVC) programmes, the first of its kind in Malaysia, throughout the year. The objective of this series is to advance the domestic VC and PE ecosystem by connecting the different CVC ecosystem players, raising awareness of promising investment opportunities in CVC, and stimulating corporate investments among larger PLCs. These programmes were attended by corporate representatives, Bursa Malaysia, and relevant government agencies.

Additionally, together with BNM, the SC held a roundtable session on 3 February 2023 to better understand issues faced by VC and PE players with regards to the Malaysian Foreign Exchange Policy (FEP) and to discuss possible solutions. The event was attended by representatives from Malaysian startups, VC and PE firms, as well as ecosystem enablers including MDEC, Khazanah Nasional, Penjana Kapital, and Ernst & Young.

The SC also worked closely with state government officials on their shared objective of expanding the alternative financing space. On 12 June 2023, the SC, together with the Penang State Government and InvestPenang, organised the Capital Market Push for Penang Ecosystem. The one-day event was aimed at raising awareness on the various fundraising avenues available in the capital market for SMEs as well as introducing venture investments to Penang’s network of high-net-worth individuals (HNWIs), family offices and corporates. Supported by Penjana Kapital, Bursa Malaysia, and Digital Penang, the event was attended by 164 individuals representing various groups from Penang’s business community, namely SMEs, corporates, associations, MTCs, family offices and HNWEs – as well as various state and local government officials.

Additionally, on 17 July 2023, the SC collaborated with Penjana Kapital, Permodalan Negeri Selangor Bhd (PNSB), and the Selangor Information Technology & Digital Economy Corporation (SIDEC) to organise the signing of an MOU to establish the Dana Penjana Selangor (DPS) between Penjana Kapital, PNSB and SIDEC. The SC’s support for the MOU is a testament to its keen interest in public-private collaboration in the VC and PE ecosystem. The MOU signing ceremony held at the SC was attended by the then Deputy Finance Minister II, YB Steven Sim Chee Keong and 80 representatives from various agencies, startups, VC and PE firms.
Industry Dialogues
In line with the SC’s strategic objective to become a more engaging and facilitative regulator, the SC often holds regular dialogues with industry players to ensure ongoing feedback on the SC’s capital market policies and initiatives.
The SC held its annual Securities Commission Industry Dialogue (SCID) on 31 July 2023 (Fund Management Session) and on 3 August 2023 (Equity & Debt Capital Market Session and Private Market Session). The event saw over 60 capital market industry leaders encompassing investment banking, stockbroking, fund management, and private markets. The participants shared proposals and issues over a range of topics under the three broad areas of investment opportunities, funding inclusivity, and market reforms in the capital market. Apart from the initiatives announced, several other topics and issues were also raised and discussed extensively. The proposals were then reviewed to determine its respective merits before being incorporated into the SC’s business planning and developmental efforts.

Following two years of virtual meetings due to the pandemic, the 8th Brokerage Industry Consultative Committee (BICC) Meeting was held physically at the SC on 20 July 2023. The BICC was established in 2018 to provide a consultative platform between the SC, Bursa Malaysia, and brokerage industry associations such as the Association of Stockbroking Companies Malaysia (ASCM) and MIBA. It aims to collectively promote continued development and sustainability of the equities market. In the BICC Meeting, matters in relation to market vibrancy were discussed, particularly on ways to further grow and develop the capital market from the perspectives of capital market intermediation, as well as continuous upskilling and enhancing talent in the broader capital market space.

In November 2023, the SC organised two Supervisory Dialogues with CEOs of stockbroking and fund management companies respectively. During these dialogue sessions, the SC emphasised the importance of instilling good culture and strong governance in driving proper business conduct. The SC also highlighted key concerns and expectations arising from its supervisory assessments in several key areas, such as anti-money laundering and combating terrorism financing and proliferation financing, the conduct of MRs and the monitoring of MRs by intermediaries, as well as sales practices in the distribution of UTF’s and wholesale funds.
Facilitating Financing for MSMEs
The SC actively engaged with a variety of stakeholders in the MSMEs ecosystem throughout 2023, as it strives to build an effective financing pipeline for the development of the nation’s small businesses.
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SCxSC Grow
Further, in support of the SCxSC Grow initiative, the SC also engaged with nearly 150 external stakeholders to better understand the current financing challenges faced by MSMEs in the agriculture sector, as well as to develop an alternative financing space to close this funding gap.
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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.