Digital Financing Solutions
Over the years, the SC has embarked on efforts to enable both investors and issuers to benefit from market-based financing avenues. The rise of the technology-savvy and connected generation of investors has necessitated innovative investment solutions which offer greater convenience, channel access, transparency and lower cost.

Recognising the growing financing needs of businesses, the SC in 2016 introduced the region’s first P2P financing guidelines followed the 2015 release of the Equity Crowdfunding (ECF) framework, which helped facilitate early-stage financing.

To meet growing demands for the capability to manage investments through digital finance, the SC has also develop a facilitative framework to encourage the provision of digital investment services in Malaysia.

Know more about recognized market: Guidelines for Recognized Market.
  • Equity Crowdfunding (ECF)
    In February 2015, SC became the first regulator in the region to introduce a framework for ECF, with six applicants subsequently approved to become registered ECF platform operators in Malaysia.

    ECF is a form of `patient capital’ where investors take a stake in new companies and are expected to maintain that stake for an extended period of time. The low minimum investment threshold is also meant to attract participation from first-time investors who may choose this type of investment as their first asset class due to having a passion or interest in a particular business or venture.

    This category of investors falls within the providers of `emotional capital’. We hope that this gentle introduction to investing with less capital will appeal to a new generation of investors who will eventually expand into other asset classes in the capital markets.
  • Peer-to-Peer (P2P)
    Recognising the growing financing needs of businesses, the SC in 2016 introduced the region’s first P2P financing guidelines which subsequently led to registration of six operators.

    P2P lending is a web-based innovation that broadens the ability of entrepreneurs and small business owners to unlock capital from a pool of individual lenders in small amounts and provides a quick turnaround time to obtain financing for their businesses, important in widening access to finance for small businesses, and wider benefits to economic growth.
  • Digital Asset Exchange (DAX)
    The SC notes a growing interest in the use cases of blockchain, blockchain-based digital assets and investing in such digital assets, both domestically and globally. These digital assets are known by a variety of terms including crypto assets, digital tokens and coins.

    Digital assets and ICOs can become an alternative avenue for early-stage financing as well as a new investment class for investors, provided they are harness in a right way with the appropriate safeguards in place. Regulations are being put in place to bring the digital assets to bring the digital assets within the remit of securities laws to promote fair and orderly trading and ensure investor protection.

    In order to implement the regulatory framework on digital assets, the SC and Bank Negara Malaysia (BNM) entered into co-ordination arrangements to ensure compliance with laws and regulations under the purview of both regulators.

    Digital Asset Exchange in Transition Period

    15 January 2019, the Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019 came into force.

    The SC has put in place arrangements to facilitate current operating platforms that facilitate trades in digital asset for a transitional period until 1 March 2019, subject to them fulfilling the conditions specified by the SC. During this period, these platform operators will not be permitted to accept new investors and will only be allowed to facilitate the withdrawal or transfer of client assets with the written instruction of the investor.

    Members of the public are advised that the digital asset exchanges that are listed below have been permitted by the SC to continue with their operations for the transitional period until 1 March 2019.

    However, members of the public should take note that this notice does not constitute an approval, authorisation or endorsement by the SC of any digital asset exchange operators or any digital assets traded on the platforms.
  • Digital Investment Management (DIM)
    Introduction of investment services through digital channels complements the existing suites of online investments and enables more investors, particularly who have been underserved, to access these services at an affordable cost. The launch of the Digital Investment Management (DIM) framework in May 2017 was targeted at encouraging both new and existing market players to develop innovative and more effective ways of delivering high-quality products and services to investors by embracing digitization.

    Following the launch of the framework, we have received strong interest from local and regional players to apply for DIM license. Through Alliance of FinTech Community (aFINity) engagement labs, the SC has been conducting engagements with potential players to guide them in meeting readiness requirements when applying for DIM license.

    The DIM framework is a fund management business incorporating innovative technologies to offer automated discretionary portfolio management services to investors. It aims to replicate many of the activities performed by traditional fund managers through online access.
    Key Fund Management Activities
    Understand Client Needs
    • Gather client information
    • Understand needs & preference
    • Assess risk-tolerance
    Propose Solution
    • Select asset allocation
    • Select securities forming investment portfolio
    • Generate proposals
    Implement Solutions
    • Select asset allocation
    • Select securities forming investment portfolio
    • Generate proposals
    Monitor Results & Adjust Strategy
    • Periodic performance review
    • Dashboards, status-alerts
    • Rebalancing of portfolio
A Digital Investment Management company aims to replicate many of the key activities performed by traditional fund managers through online access
How it Work?
In general, Digital Investment Manager (DIM) uses simple surveys to profile clients and to assess their needs. An asset allocation is proposed, adjusted and implemented. Portfolios are monitored, rebalanced and reported on.
Prospective clients go online to define their:
  • Financial characteristics
  • Risk profile
  • Financial goals
by answering a series of questions in an online questionnaire.
Based on the risk profile, a proprietary algorithm is run to define the best suited, personalized investment portfolio to minimize risk and maximize performance.
The resulting  investment recommendation is displayed online for future clients to visualise the potential gains and losses of the proposal, as well as a more or less detailed composition of the proposed portfolio with exposure levels and target underlying securities.
The empowered investor can accept and proceed with an online transfer/account opening.
The algorithm will provide discretionary management services steered by the risk profile and investment allocation.
Customers will be able to track their  investment performance anytime anywhere on their mobile.
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HOTLINE: +603-6204 8000
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