During the period from 14 December 2021 to 4 January 2022, Bank Negara Malaysia (‘BNM’) issued nine regulatory-related documents, comprising seven Exposure Drafts of Policy Documents, a Policy Document and a Discussion Paper. A summary of these documents is provided below.
 
1.  Exposure Draft of Policy Document on Business Continuity Management
 
This exposure draft sets out the proposed revisions to the existing Guidelines on Business Continuity Management (Revised) issued by BNM on 3 June 2011 (‘Existing BCM Policy Document’).
 
The Policy Document to be issued on the basis of this exposure draft (‘New BCM Policy Document’) will apply to licensed banks, licensed investment banks, licensed Islamic bank, licensed insurers, licensed takaful operators, prescribed development financial institutions, operators of designated payment systems and approved issuers of electronic money.
 
The New BCM Policy Document will come into effect six months after its date of issuance, subject to the transitional arrangements set out in Part D of the said document. The New BCM Policy Document will replace the documents set out in paragraph 7.1 thereof.
 
The deadline for submitting feedback to BNM on the exposure draft is 31 March 2022.
 
2.  Exposure Draft on Climate Risk Management and Scenario Analysis
 
This exposure draft sets out the proposed requirements and guidance on climate risk management and scenario analysis. The proposed requirements and expectations are to ensure that financial institutions strengthen the management of financial risks arising from climate change to enhance the resilience of the financial sector against climate-related risks and to facilitate an orderly transition to a low-carbon economy.
 
The Policy Document to be issued on the basis of this exposure draft (‘Climate Risk Policy Document’) will apply to licensed banks, licensed investment banks, licensed Islamic bank, prescribed development financial institutions licensed insurers (including professional reinsurers), licensed takaful operators (including professional retakaful operators) and financial holding companies.
 
The Climate Risk Policy Document will come into effect on 1 June 2022, subject to the transitional arrangements as set out in paragraph 4.1 thereof.
 
The deadline for submitting feedback to BNM on the exposure draft is 31 March 2022.
 
3.  Code of Conduct For Malaysia Wholesale Financial Markets
 
The Code of Conduct For Malaysia Wholesale Financial Markets(‘Code of Conduct’) was issued as a Policy Document on 31 December 2021. It updates and replaces the Code of Conduct for Malaysia Wholesale Financial Markets issued by BNM on 22 April 2020, and will come into effect on 31 January 2022, except for paragraphs 8.1 to 8.3 and 28.2 to 28.4 thereof which will come into effect on 31 July 2022.

The Code of Conduct sets out the eligibility requirements for dealers and brokers, the requirements in relation to market conduct and internal controls to safeguard professionalism and integrity of the wholesale financial markets and the role of industry associations in preserving market integrity.
 
The Code of Conduct applies to market participants who deal in the wholesale financial markets either as a sell-side or buy-side entity, and may include licensed banks, licensed investment banks, licensed Islamic banks, prescribed development financial institutions, licensed insurers, licensed takaful operators, approved money-brokers, approved operators of electronic trading or broking platforms, corporations and investment institutions. Paragraph 2.2 of the Code of Conduct sets out the parts of the Code of Conduct that apply to the institutions mentioned above.
 
At the same time, BNM also issued the Wholesale Market Conduct Practices Guidance Document which can be accessed here.
 
4.  Exposure Draft of Management of Participating Life Business
 
This exposure draft sets out the proposed enhancements to the requirements on the management of participating life insurance funds in order to preserve the safety and soundness of the participating life funds and protect policy owners’ interests.
 
The Policy Document to be issued on the basis of this exposure draft (‘Participating Life Policy Document’) will apply to licensed insurers. The Participating Life Policy Document will come into effect on its date of issuance and supersede the documents set out in paragraph 7.1 thereof.
 
The deadline for submitting feedback to BNM on the exposure draft is 31 March 2022.
 
5.  Exposure Draft on Management of Insurance Funds
 
This exposure draft sets out, among others, the requirements relating to the establishment and maintenance of insurance funds, the composition of an insurance fund, including requirements on withdrawals and specific requirements for assets.
 
The Policy Document to be issued on the basis of this exposure draft (‘Insurance Fund Policy Document’) will apply to licensed insurers. The Insurance Fund Policy Document will come into effect on its date of issuance and supersede the documents set out in paragraph 7.1 thereof.
 
The deadline for submitting feedback to BNM on the exposure draft is 31 March 2022.
 
6. Exposure Draft of the Governance, Risk Management, and Operations for Money Services Business
 
This exposure draft sets out the minimum standards that money services business (MSB) licensees are required to observe in implementing sound governance, appropriate risk management and robust internal control systems for their business.
 
The Policy Document to be issued on the basis of this exposure draft (‘MSB Policy Document’) will apply to money service businesses licensed under the Money Services Business Act 2011. The MSB Policy Document will come into effect on its date of issuance and supersede the documents set out in Appendix I thereof.
 
The deadline for submitting feedback to BNM on the exposure draft is 28 February 2022.
 
7.  Exposure Draft of Payment System Operator
 
This exposure draft outlines the requirements that seek to ensure the safety, efficiency and reliability of payment systems, preserve public confidence in the payment systems and the use of payment instruments and ensure payment systems are aligned with relevant international standards.
 
The Policy Document to be issued on the basis of this exposure draft (‘PSO Policy Document’) will apply to operators approved under section 11 of the Financial Services Act 2013 (‘FSA’) or section 11 of the Islamic Financial Services Act 2013 (‘IFSA’) to operate a payment system set out in paragraph 1 of Division 1 of Part 1 of Schedule 1 of the FSA or paragraph 1 of Part 1 of Schedule 1 of the IFSA respectively. The PSO Policy Document will come into effect on its date of issuance.
 
The deadline for submitting feedback to BNM on the exposure draft is 31 March 2022.
 
8.  Exposure Draft of Payment Cards Framework
 
This exposure draft sets out proposed measures to foster a safe, efficient and transparent payment card industry in Malaysia and seek to ensure that the cost of accepting payment cards remains fair and reasonable, which will help in promoting wider acceptance and usage of payment cards.

The Policy Document to be issued on the basis of this exposure draft (‘Payment Cards Framework’) will apply to issuers of credit card, debit card and international brand prepaid card, acquirers and operators of a payment system including operators of a payment card network, as defined in paragraph 5.2 of the Payment Cards Framework. The Payment Cards Framework will come into effect on its date of issuance and supersede the documents set out in paragraph 7.1 thereof.
 
The deadline for submitting feedback to BNM on the exposure draft is 15 February 2022.
 
9.  Discussion Paper on Licensing Framework for Digital Insurers and Takaful Operators
 
This discussion paper outlines the proposed framework for two new categories of licensees for insurance and takaful business, namely digital insurers licensed under section 10 of the FSA to carry on digital insurance business and digital takaful operators licensed under section 10 of the IFSA to carry on digital takaful business (collectively ‘DITOs’) and seeks feedback on the proposed entry requirements and key assessment criteria for the licensing of DITOs, the proposed temporary flexibilities during the foundational phase of the operations of DITOs, the regulatory framework and the market infrastructure to support the development of digital insurance and takaful in Malaysia.
 
The Policy Document to be issued on the basis of this discussion paper will apply to applicants under section 10 of the FSA to carry on digital insurance business and section 10 of the IFSA to carry on digital takaful business, prospective licensed digital insurers, prospective licensed digital takaful operators, shareholders of prospective licensed digital insurers, shareholders of prospective licensed digital takaful operators, shareholders of licensed digital insurers and shareholders of licensed digital takaful operators.
 
According to BNM, a separate policy document(s) will be issued to address the prudential and business conduct requirements relating to DITOs later in 2022.
 
The deadline for submitting feedback to BNM on the discussion paper is 28 February 2022.
 
Alert prepared by Kok Chee Kheong (Partner) of the Corporate Practice of Skrine.