Securities Commission announces new digital-related initiatives

On 31 October 2022, the Securities Commission Malaysia (‘SC’) announced four digital-related initiatives to boost the country’s capital market and help support the country’s economic recovery. These initiatives will also allow Micro, Small and Medium Enterprises (‘MSMEs’) and Mid-Tier Companies (‘MTCs’) better access to funding to grow their businesses.
 
The four initiatives are as follows: 
 
A.   Scaling-up MSME access to financing
According to the SC, as of June 2022, a total of RM3.5 billion has been raised through 41,000 successful campaigns by over 5,400 MSMEs by way of Equity Crowdfunding (‘ECF’) and Peer-to-Peer (‘P2P’) financing since the inception of these alternative financing platforms.
 
To further harness the potential of ECF and P2P financing platforms, the SC will open new applications for the following: 
  1. Registration of new ECF and P2P market operators with Shariah solutions and value propositions 
According to the SC, this initiative will catalyse innovation in Shariah offerings to further facilitate access to funding needs of MSMEs through alternative fund-raising digital platforms. It will also enhance the Islamic fintech ecosystem and strengthen the Islamic capital market proposition. The initiative also aims to foster the growth of MSMEs in the halal economy while allowing greater access to investments for all capital market participants. 
  1. Registration of new P2P operators focusing on the offering of debt-based financing instruments by MTCs and other larger companies 
This measure will allow MTCs to seek debt-based financing directly from investors, while reducing the number of intermediaries involved in the process. 
 
B.   Encouraging innovation and building capabilities through digitalisation 
To promote and facilitate greater and faster digital transformation of the capital market, as well as increase investor participation, the SC will introduce the following initiatives: 
  1. Registration of new Recognised Market Operators-Digital Asset Exchange (‘RMO-DAX’) to facilitate regulated digital asset investments
This initiative will enable investors to invest in alternative assets through regulated avenues and facilitate the introduction of platforms with differentiated value propositions.
 
The SC believes that allowing a greater number and variety of registered RMO-DAX operators will increase capital market vibrancy by widening the number and types of exchange platforms available for investors to invest in.1 
  1. Establishment of a RM30 million Digital Innovation Fund (‘DIGID’) to encourage digitalisation of the capital market 
Recognising the key role that capital market intermediaries play in the evolution of the digital capital market and to invest in the industry's future growth, DIGID will co-fund innovative projects that utilise technology to enable new and competitive propositions for the Malaysian capital market.
 
DIGID seeks to encourage smaller capital market players to adopt innovative digital solutions and the development of industry-wide solutions impacting capital raising and investment activities.
 
The funding amount will cover up to 70% of approved qualifying expenses and is capped at RM500,000 per project. The funding amount will be disbursed on a reimbursement basis after agreed-upon milestone deliverables have been met. Interested parties may submit their applications as from 1 January 2023.
 
Parties interested in applying to register new ECF, P2P and DAX digital platforms are to engage with the SC from 1 November 2022. Updated guidelines and forms will be made available by the SC from 15 November 2022.
 
In addition, information on the four new measures, including guidelines and application forms, will be uploaded from time to time on the SC’s website.
 
The SC’s media release on the digital-related initiates can be accessed here.
 
Alert by Lee Ai Hsian (Partner) of the Fintech Practice of Skrine.
 
 

1 There are presently four RMO-DAX operators registered with the SC, i.e. Luno Malaysia Sdn Bhd, MX Global Sdn Bhd, SINEGY DAX Sdn Bhd, and Tokenize Technology (M) Sdn Bhd.

This alert contains general information only. It does not constitute legal advice nor an expression of legal opinion and should not be relied upon as such. For further information, kindly contact skrine@skrine.com.