Reminder to All Capital Market Intermediaries to Ensure Continuous Compliance with the Minimum Financial Requirements
13 August 2024
The Securities Commission Malaysia (SC) has observed with concern several instances where intermediaries have failed to maintain the minimum financial requirements at all times, as stipulated in subparagraph 4.04 (2) of the SC’s the Licensing Handbook. This non-compliance poses significant risks to the integrity of the capital market and the protection of investors.
The purpose of this circular is to underscore the critical importance of adhering to the minimum financial requirements at all times. These requirements are designed to ensure that intermediaries are sufficiently capitalised to endure financial pressures and to safeguard investors from potential losses incurred by intermediaries.
All intermediaries are hereby reminded that should your financial position fall below the stipulated minimum financial requirements, you are prohibited from continuing to engage in regulated activities without prior written consent from the SC, pursuant to section 67 of the Capital Markets and Services Act 2007. In the event of a potential or actual breach of these requirements, you must notify the SC in writing immediately, detailing the corrective actions you intend to take.
To ensure ongoing compliance with the minimum financial requirements, the SC expects all intermediaries to implement the following measures:
Establish and enforce clear, comprehensive, and effective monitoring and control mechanisms to prevent their financial positions from falling below the minimum requirements. For intermediaries engaged in multiple regulated activities, the highest minimum financial requirements must be met.
Pro-actively identify and address any potential issues that could lead to a breach of the minimum financial requirements.
Notify the SC immediately in the event of a breach or potential breach of minimum financial requirements, providing details of the proposed rectification measures and the expected timeline for resolution.
The SC requires all intermediaries to treat these reminders with the utmost seriousness and implement the necessary controls without delay. Non-compliance with the minimum financial requirements may lead to regulatory actions, up to and including the suspension or cessation of your ability to conduct regulated activities.
Should you require further clarification or have any queries, please do not hesitate to contact the relevant officer in the SC’s Intermediary Supervision Department. The SC expects that you will take the necessary steps to ensure full compliance with the regulatory requirements.
The Securities Commission Malaysia (SC) was established on 1 March 1993 under the Securities Commission Act 1993 (SCA). We are a self-funded statutory body entrusted with the responsibility to regulate and develop the Malaysian capital market.
