SC Unveils Three Initiatives to Spur Innovation

The Securities Commission Malaysia (SC) will introduce a regulatory sandbox and enhance its regulatory framework to encourage securities tokenisation to help spur  innovations in the capital market.  

The SC will also be collaborating with Khazanah Nasional to explore the issuance of  tokenised bond. 

The three initiatives, unveiled at the SCxSC Fintech Summit 2024 starting today, are  aimed at promoting a responsible innovation in the country’s capital market. About  1,000 people are attending the two-day summit. 

In his opening address, the SC Chairman Dato’ Mohammad Faiz Azmi said the SC is  committed to foster a thriving fintech ecosystem in the capital market.  

“To drive innovation in the capital market, the SC is taking a holistic approach. Through  initiatives like the regulatory sandbox and SCxSC, we enable industry experimentation and foster collaboration with the broader ecosystem,” he said. 

Recognising rapid technological advancements, the SC has received several proposals that do not fully fit within existing regulatory frameworks.  

To address this, the SC is introducing a regulatory sandbox framework (sandbox),  providing a controlled environment for testing innovative products and services while ensuring investor protection. 

Corporations developing solutions in areas like financial inclusiveness, Islamic finance and retirement solutions are encouraged to apply.  

The sandbox is a regulatory tool for enhancing policies to ensure they are fit for  purpose. For example, it may allow innovative tokenised offerings to be tested within  the sandbox, in line with the SC’s efforts to develop its technology-agnostic approach  for tokenised securities and identify best practices. 

In this respect, the SC will develop a guidance early next year for intermediaries to  understand and manage associated risks in relation to securities tokenisation.

Corporations have until April 2025 to apply for the first cohort of the Sandbox.  

Interested parties are required to participate in pre-consultation sessions prior to  submission. These sessions are available immediately, and interested parties can begin engagements by emailing [email protected].  

Accepted applications will have up to 12 months to test their products or services. 

Eligibility criteria include offering innovative capital market products or services that  are not currently available in Malaysia and do not fully fit under existing regulatory  framework that bring value to the market. 

In addition, the SC is collaborating with Khazanah Nasional, as a potential issuer, to  explore how blockchain technology can enhance the efficiency of bond issuance and  operations. This initiative explores the use of smart contracts and custodial  arrangements. 

This year’s edition of the SCxSC Fintech Summit focuses on the use cases and  opportunities of emerging technologies like artificial intelligence and blockchain in the  capital market. 

For the past 10 years, the Summit has served as a platform for fintech communities  to engage, network and explore fintech-driven opportunities. 

Insights are delivered through an immersive experience of blending cutting-edge  demos, roundtables, exhibitions, keynotes and panel discussions.  

The SCxSC Fintech Summit 2024 also featured the Demo Day of the SC FIKRA ACE  Accelerator1 programme, where 10 startups pitched for the chance to be selected as  2024 cohort’s winners.  

SCxSC aligns with the SC’s broader innovation agenda to harness technology, supporting the Capital Market Masterplan 3 (CMP3) objectives of catalysing economic  growth, empowering investors and promoting a sustainable, inclusive stakeholder.

...