Fostering Market Vibrancy Through Innovation and Participation - Advancing a Vibrant, Inclusive and Sustainable Capital Market with Regional and Islamic Leadership

Fostering Market Vibrancy Through Innovation and Participation

The SC continued to broaden access and drive competitiveness of the capital market. Key initiatives included deepening the wealth management base through the SFO framework, enhancing clarity for private market participants, improving liquidity and efficiency in the derivatives market as well as strengthening the digital asset and tokenisation ecosystem. Collectively, these measures aim to foster a more vibrant capital market that responds effectively to evolving investor needs and industry opportunities.

Deepening Malaysia’s Wealth Management Investor Base through the Single Family Office Incentive Scheme

The SFO Incentive Scheme aims to unlock a new pool of long-term capital for Malaysia’s financial markets. By consolidating family-controlled wealth that often sits in passive or closely-held assets, the framework encourages families to shift from passive wealth preservation to strategic, purpose-driven investment. Family offices are lean and agile, enabling faster investment decisions and longer-term planning compared with institutional investors. Their participation introduces a patient, stable investor base suited to projects with extended horizons such as infrastructure, sustainable finance and innovation.

To ensure tangible local benefits, each SFO must invest at least 10% of its AUM or RM10 million, whichever is lower, in Malaysian assets during its first 10 years, and 10% or RM10 million, whichever is higher, thereafter. These investments must be new in the first year of assessment, ensuring capital flows into productive domestic assets.

Investments in promoted sectors such as the New Industrial Plan Master Plan 2030 (NIMP 2030), Johor–Singapore Special Economic Zone (JS-SEZ) and sustainability related investment that align with Malaysian or ASEAN standards, enjoy a 1.5x multiplier in AUM recognition, aligning family capital with national priorities and sustainable development goals.

Revised Edition of Practical Guide on Venture Capital and Private Equity in Malaysia

The SC is cognisant of the importance of regularity clarity for private markets industry players, and strives to continuously improve the clarity of guidance intended for the Malaysian private markets. In this, the SC published the revised edition of the Practical Guide on Venture Capital and Private Equity in Malaysia (VC/PE Practical Guide) online on 30 May 2025. This VC/PE Practical Guide is intended to aid prospective venture capital (VC) and private equity (PE) fund managers, service providers and investors in navigating the Malaysian policy landscape critical to VC/PE fund management operations, including capital market regulations, fund structuring, taxation and foreign exchange policy.

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.