Revitilising the Capital Market via Facilitative Framework

Review of the Capital Markets and Services Act 2007 and the Securities Commission Malaysia Act 1993

The SC is undertaking a holistic review of the CMSA to ensure that the securities laws remain fit-for-purpose. The review is part of the SC’s efforts to modernise the CMSA and promote efficiencies to enable the capital market to remain competitive while maintaining adequate investor protection. Among the areas under review are in relation to the capital market infrastructure, licensing framework, disclosure requirements accompanying an offer of a capital market product, the approval process for corporate proposals and takeovers regulations.

The SC has engaged the various stakeholders for feedback to ensure the comprehensiveness of its review which includes industry engagements and focus group consultations. By seeking input from stakeholders across the industry, the SC would also be able to identify potential gaps and gain valuable insights into how best to improve the CMSA.

In tandem with the CMSA review, the SCMA is also being reviewed to modernise and streamline its provisions with the new CMSA. This includes ensuring that the SC is well positioned to address the fast-evolving digital advances in the capital market.

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.