Canada    FinTech Guide    Chapter 2    Malaysia


2. Asset and Portfolio Management
Malaysia  Malaysia

It is understood that the regulators are supportive of the development within this segment and accordingly have updated the legislation to reflect the ‘digitalisation’ of it. In view the ‘digitalisation’ of this space is more evolutionary than revolutionary, the public’s perception would seem to be fairly unchanged as compared to traditional means of asset and portfolio management.



Legal Affairs


FinTechs providing services as described above must be locally incorporated companies and obtain a capital market services license (“CMSL”) from Securities Commission Malaysia (“SC”). In addition to the aforementioned, the CMSL license holder must also submit at least two applications for a capital market services representative license (“CMSRL”) for every regulated activity which is to be carried out (as defined under Schedule 2 of Capital Market Services Act 2007) (“Regulated Activity”).

The FinTechs must also demonstrate that, amongst others, it has the technological capabilities and support system to undertake the digital investment management business as well as possessing a sound digital value proposition.

The annual license fee for a CMSL for any first Regulated Activity is RM2,000-00 and for any subsequent additional Regulated Activity is RM1,000-00 each. The annual license fee for a CMSRL is RM200-00 regardless of the number of Regulated Activities the CMSRL holder carry on for its principal. Furthermore such FinTechs (which belong to the category of "fund management" and "digital investment management company") must maintain a minimum paid-up capital and shareholders’ funds of RM2,000,000-00 at all times.



Economic Conditions


According to SC, as at 31 March 2017, the total assets under management by the 74 fund management companies in Malaysia, is RM733.88 billion.



Miscellaneous


SC will only authorise (includes grant of license, registration or approval) an applicant if the application is in the ‘best interest’ of Malaysia. In determining what constitutes ‘best interest’, SC will give regard to any one or more of the following:


  1. the area of specialisation and level of expertise that can be offered to the capital market including the effect on productivity, transference of skills and efficiency and quality of capital market services;
  2. the risk posed on the systemic stability of the capital market including activities and conduct that will likely impact the orderly functioning of the capital market;
  3. contribution towards attracting investments, enhancing market linkages and promoting vibrancy in the capital market;
  4. ability in developing strategic or nascent sectors in the capital market; or
  5. the degree and significance of participation of Malaysian in the capital market


Contributing Authors

Lee Hishammuddin Allen & Gledhill

Adlin Abdul Majid
Kuala Lumpur, Malaysia


Andrew Ean Vooi Chiew
Kuala Lumpur, Malaysia

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Chapter Index:


1. Payment Services / Mobile Payment

2. Asset and Portfolio Management

3. Consulting and Broking Services / Robo-advisory / Auto-trading

4. Trading Platforms / Social Trading Platforms / Signal Following

5. Crowdfunding / Crowdinvesting / Crowdlending

6. Virtual Currency - Bitcoin

7. Loan Services / Factoring / Loan Broking / Finetrading

8. Online Banking Services

9. Analytics and Research / Data Management / Risk Management

10. Accounting

11. Identification

12. Online-pawning

13. InsurTech

14. RegTech

15. Initial Coin Offerings (ICOs)

Disclaimer:
The information in this guide provides a general overview at the time of publication and is not intended to be a comprehensive review of all legal developments nor should it be taken as opinion or legal advice on the matters covered. It is for general information purposes only and readers should take legal advice from a Multilaw member firm.

Publication Date: 1 May 2018