The SC’s Priorities - Regulatory Performance and Outcomes

The SC’s Priorities

Reducing Time to Market – Continuing the Focused Scope Assessment and Expediting IPO Approvals

The Focused Scope Assessment (FSA) framework, launched in 2024, marks a significant advancement to enhance operational efficiency and meet the evolving standards of Malaysia’s capital markets. This framework, which aligns with international standards set by IOSCO and FATF, aims to expedite the approval process for applications relating to new eligible capital market intermediaries and registration of RMOs, reducing the time to market from over six months to just three months.

The FSA framework applies to activities including corporate finance advisory, investment advice, boutique portfolio management, financial planning, venture capital, private equity, digital asset custodianship, and RMOs. It emphasises a targeted review approach, assessing the applicant’s regulatory and operational readiness based on specific, quantifiable criteria such as fit and proper assessments and capital adequacy. The SC continues to uphold its existing assessment criteria for all licensing and registration applications, focusing on key risk areas such as business model, fit and properness, compliance with minimum regulatory requirements, and other considerations as stipulated in the applicable laws, regulations, and guidelines. This framework empowers applicants with more control over the efficiency of their application process and encourages proactive readiness among applicants, aligning with its commitment to a robust and efficient capital market.

In line with the SC’s continuous efforts to streamline processes for operational efficiency and effectiveness, the RMO Guidelines were amended to reinforce governance and compliance. These updates place greater responsibility on boards, senior management, and compliance officers while enhancing the SC’s supervisory capabilities through clarified regulatory expectations and introducing a new requirement for full-scope supervisory assessments for new capital market intermediaries and RMOs within 12 months of their operational. This approach supports a more secure and transparent capital market ecosystem.

Expedited IPO Approval Process by the SC and Bursa Malaysia

A key highlight of 2024 was the introduction of a fast-track IPO approval process by the SC and Bursa Malaysia. Launched in March 2024, the initiative aims to expedite IPO approvals on both the Main Market and the ACE Market with a target of reaching a decision within three months. This commitment is conditional on Principal Advisers/Sponsors satisfactorily addressing the regulators’ queries and comments within five market days upon receipt of such queries and comments. Despite the shorter timeframes, the regulators have committed to maintaining rigorous assessment, ensuring that investors protection and public interests remain a top priority. This initiative is expected to attract highquality companies, particularly those aligned with Malaysia’s national growth agenda, by offering a clearer and more efficient path to listing.

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.