Securities Commission chairman Datuk Mohammad Faiz Azmi.
PETALING JAYA: 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.
In a statement, the SC said it will also be collaborating with Khazanah Nasional Bhd 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.
In his opening address, SC chairman Datuk Mohammad Faiz Azmi said the SC is committed to fostering 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 said it 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 said it 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 afinity@seccom.com.my.
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.
