Gate-Keeping - Regulatory Performance and Outcomes

Gate-Keeping

The SC remains unwavering in its commitment in ensuring that only individuals and entities that meet fit and proper standards are granted licenses or registrations to operate within the capital markets. In 2024, the SC continued its rigorous approach to licensing, performing comprehensive assessments for each applicant, including adverse checks with other regulatory bodies and authorities to ensure a high standard of market integrity (Table 11). All applications for Capital Markets Services Licences (CMSLs) and Capital Markets Services Representative’s Licences (CMSRLs) were processed within the timelines established by the SC’s service charter, reflecting the SC’s commitment for efficiency and adherence to service standards (Table 12).

Note:

Include six applications approved in principle pending fulfilment of conditions by the applicants for licence issuance.
Include applications submitted by an entity seeking to be registered for two different activities.
Include one application rejected.

In 2024, seven new CMSL holders were approved. Meanwhile, there were 15 new registered entities approved which includes 14 venture capital and private equity (VCPE), and one Digital Asset Custodian (DAC). During the same period, the SC also registered three recognized market operators (RMO), consisting of two peer-to-peer financing platform operators and one digital asset exchange operator.

As of 31 December 2024, 937 CMSRL applications were approved and the total number of CMSRL holders stood at 10,314.

During 2024, four CMSL holders had surrendered their licenses as they were no longer in the business of the regulated activity(ies) for which they were licensed. In addition, 889 CMSRL holders had surrendered their respective licences due to retirement, resignation (due to better offer) and change in career path.

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.