The Securities Commission Malaysia (SC) has on Tuesday introduced the Focused Scope Assessment (FSA) for new eligible Capital Market Intermediaries (CMIs) and Recognized Market Operators (RMOs).

The FSA, which takes effect immediately via amendments to the guidelines on recognized markets, is part of the regulator’s new gatekeeping approach in light of the capital market’s growing maturity and evolving regulatory standards, SC said in a statement.

“The fundraising and investment channels via the private market had been on a steady growth for micro, small and medium enterprises (MSMEs) to tap into funds for their expansion plans,” SC Chairman Awang Adek Hussin said.

“As at the third quarter of 2023, the equity crowdfunding (ECF) and peer-to-peer (P2P) platforms have collectively raised approximately MYR 5.9 billion ($1.24 billion), benefiting almost 10,000 MSMEs,

“This commitment to develop a more progressive and robust regulatory framework reflects the SC’s recognition of the crucial role these businesses play in driving the nation’s
growth and development,” he added.

According to the statement, the FSA evaluates the applicant’s operational and regulatory readiness in a more targeted and efficient manner.

It aims to shorten the time to market for CMIs and RMOs to three months, where previously it could take more than six months.

The FSA will also require applicants to have an independent party validating their business policies and procedures as part of their submission to the SC.

This will give the applicant more control in ensuring efficiency and encouraging readiness to observe the requirements to undertake a regulated activity.

Notwithstanding the above requirement, the SC said it continues its regulatory obligation in assessing applicants on critical areas including fit and properness, governance and key risk areas.

Amendments to the guidelines on recognized markets were also made to set the stage for a level playing field for all RMOs, particularly in ensuring the adequacy of financial
resources to commence operations in a fair and orderly manner.

Notably, the capital requirement of MYR 5 million ($1.05 million) is now extended to new operators of equity crowd funding.

Additionally, amendments to the guidelines on recognized markets include the strengthening of practices against financial crimes, such as money laundering and terrorist financing.

SC, a statutory body reporting to the Minister of Finance in Malaysia, was established under the Securities Commission Act 1993.

It is the sole regulatory agency for the regulation and development of capital markets in Malaysia.

The SC has direct responsibility for supervising and monitoring the activities of market institutions, including the exchanges and clearing houses, and regulating all persons licensed under the Capital Markets and Services Act 2007.

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