KUALA LUMPUR: The Securities Commission Malaysia (SC) will introduce a regulatory sandbox and enhance its regulatory framework to encourage securities tokenisation to spur innovations in the capital market.
The SC will also collaborate with Khazanah Nasional Bhd to explore the issuance of tokenised bonds.
The initiatives, unveiled at the SCxSC Fintech Summit 2024, are aimed at promoting responsible innovation in the capital market.
SC chairman Datuk Mohammad Faiz Azmi said the SC is committed to fostering a thriving fintech ecosystem and drive innovation in the capital market.
“Malaysia’s Madani Economy Framework emphasises restructuring of the economy for competitiveness and sustainability. Our capital market, which now stood at RM3.95 trillion, must adapt to evolving demands related to climate change, social inclusion, new growth sectors, and demographic shifts,” he said in his opening remarks at the summit today.
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, 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 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 preconsultation sessions prior to submission.
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 Summit focuses on the use cases and opportunities of emerging technologies like artificial intelligence and blockchain in the capital market.
The summit also featured the Demo Day of the SC FIKRA ACE Accelerator’ 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 objectives of catalysing economic growth, empowering investors and promoting sustainable, inclusive stakeholders.
