Supporting the National Sustainability Agenda via the Capital Market

Sustainability remained a central pillar in strengthening the long-term resilience and competitiveness of Malaysia’s capital market. The SC continued to advance initiatives that embed sustainable practices across the ecosystem, enhance transparency, and mobilise capital towards projects with measurable social and environmental outcomes. Key developments included the establishment of Malaysia’s Social Exchange framework to channel philanthropic and private capital for social good, and the advancement of the COFAR initiative to drive financing for climate adaptation.

In parallel, the Advisory Committee on Sustainability Reporting (ACSR) made headway in implementing the NSRF, conducted a public consultation on the proposed Sustainability Assurance Framework, and supported the formation of a professional body for sustainability practitioners. Through these initiatives, the SC reinforced its commitment to enhancing the capital market ecosystem to support the national sustainability initiatives.

Paving the way for the Establishment of Malaysia’s First Social Exchange

According to the 2024 World Giving Index, Malaysia ranked 20th out of 142 countries with a score of 50, indicating a strong culture of generosity. This provides a good foundation for Malaysia to further unlock philanthropic giving in a more systematic manner. Towards this end, in 2024, the Prime Minister of Malaysia announced at the Global Islamic Economic and Finance Forum that the SC will facilitate the establishment of a Social Exchange as part of efforts to mobilise private and philanthropic capital to support social impact projects.

The Social Exchange will serve as a dedicated market based fundraising platform for projects with positive social outcomes through the mobilisation of private and philanthropic capital which will benefit entities such as non-profit organisations (NPOs), social enterprises and State Islamic Religious Councils.

In developing the Social Exchange, the SC launched a Social Exchange Pilot Programme (SEPP25) in January 2025, with participation from five NPOs showcasing social impact projects. The pilot phase provided an avenue to obtain a deeper understanding of critical components towards establishing the Social Exchange. During SEPP25, that ran for a period of six months, the five NPOs engaged closely with the SC to share data and provide input on key building blocks for the Social Exchange. SEPP25 also allowed SC to gather feedback for the development of the SC’s regulatory framework for the Social Exchange.

Following the SEPP25, and various stakeholder engagements, the SC released its Guidelines on Social Exchange Platforms (SEP Guidelines) on 19 September 2025 which paves the way for the establishment of Malaysia’s first Social Exchange to facilitate fundraising for social impact projects. The SEP Guidelines set out requirements for SEP operators and NPOs, covering eligibility, disclosure, and mandatory reporting, to assure donors on fund utilisation and project outcomes.

The development of the Social Exchange will be undertaken in phases, with the current phase involving the introduction of an SEP to facilitate eligible NPOs to raise cash donations for social impact projects listed on the SEP. While participation is voluntary, the ability to list projects on the SEP offers NPOs a credible fundraising avenue within a regulated framework. In the next phase, the Social Exchange will be expanded to include other types of instruments and participants, such as social enterprises and other NPOs.

In December 2025, the SC registered an SEP operator under section 76A of the CMSA. The registered SEP operator is responsible for establishing and operating Malaysia’s first SEP, as well as onboarding eligible NPOs in accordance with the requirements set out in the SEP Guidelines.

In an effort to encourage NPO participation, one of the measures introduced as part of Budget 2026 was the establishment of a RM2 million government grant to assist NPOs to offset part of the fees charged by SEP operator when projects are listed by NPOs on the SEP. This reflects the government’s commitment under the 13th Malaysia Plan (13MP) to foster a more resilient and impactful third sector in Malaysia.

The Social Exchange initiative marks an important step towards building a transparent, accountable, and inclusive fundraising ecosystem that supports meaningful social impact projects in Malaysia.

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.