Securities Commission Malaysia to bolster capital market with new digital-related initiatives
Tan Ai Leng
THE Securities Commission Malaysia (SC) on Monday (Oct 31) announced several new digital-related initiatives which it says will “spur the growth of the capital market” and help support the country’s economic recovery.
The initiatives will “pave the way for further liberalisation” of the capital market, and give micro, small and medium-sized enterprises (MSMEs) and mid-tier companies better access to funding to grow their business.
Speaking at a media briefing, SC chairman Awang Adek Hussin said these efforts will help promote “responsible innovation” within the digital asset space, while ensuing the interests of investors will be adequately protected.
“With this, we are opening up (the market) to local and foreign capable and responsible digital assets players,” he said, adding that digitalisation of the market is a key priority of the SC.
“(This is) so that market participants are able to adapt to digital trends and use technologies which will promote innovation with new business models and products or services, including broadening access to market-based financing in a more efficient manner,” he said.
The four initiatives announced on Monday include the registration of a new Recognised Market Operators-Digital Assets Exchange (RMO-DAX) to facilitate regulated digital asset investments. The SC said this will enable investors to invest via regulated avenues and facilitates the entry of platforms with differentiated value propositions.
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To date, there are four RMO-DAX operators registered with the SC. By allowing more players to enter the market, the SC said this would the vibrancy of the capital market by widening the number and types of exchange platforms available to invest in.
Last year, Malaysia saw RM21 billion (S$6.3 billion) in digital assets traded across those four registered RMO-DAX operators, according to data from SC. The number of digital assets investment accounts grew to around 760,000 last year, up from just 190,000 in 2020.
SC has taken a cautious approach on digital assets trading activities over the years. Several companies have been added to the regulator’s Investor Alert List for unregulated trading activities, including the likes of Binance, Oxta FX Trade Malaysia and Huobi Global.
“Previously, we didn’t open our market to something that may create problems. However, as the demand for alternative assets is becoming more prevalent, we find that there is a need to open up the market to encourage digital asset players to register with us and operate in a responsible way,” said Awang Adek. “By doing so, we are able to regulate them and protect the investors. If not, the trading will be done in unregulated territory.”
Among the other initiatives announced was the establishment of a RM30 million Digital Innovation Fund to encourage the digitalisation of the capital market. This will be used to co-fund projects that adopt new technology to improve productivity or efficiency. The funding amount will cover up to 70 per cent of approved qualifying expenses, capped at RM500,000 per project.
And to allow MSMEs and mid-tier companies to have better funding access, SC opened up the registration of new equity crowdfunding and peer-to-peer financing. Mid-tier companies refers to manufacturers with annual revenue of between RM50 million and RM500 million or services providers with annual revenue of between RM20 million to RM500 million.
As of June 2022, a total of RM3.5 billion in capital has been raised through 41,000 campaigns by over 5,400 MSMEs, since SC’s regulatory frameworks were established in 2016.
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