In a statement yesterday, the SC said the measures aim to ensure that cyber risk is managed in an optimised manner, in light of the changing landscape in the market.
KUALA LUMPUR: The Securities Commission (SC) has introduced the framework for digital investment management which includes innovative technologies into discretionary portfolio management services.
The SC said on Tuesday the framework sets out licensing and conduct requirements for the offering of automated discretionary portfolio management services to investors.
“The framework, which is part of the SC’s digital agenda for the capital market, aims to provide investors with a more convenient, affordable and accessible channel to manage and grow their wealth,” it said.
In a move to reinforce investor protection, specific conduct requirements that commensurate with the distinctive characteristics of this new business model have been set out.
“This includes the requirement for the board to be accountable for the governance of the digital investment management business,” it said.
The board will firstly have to ensure the requisite technology capabilities are in place including identification of competent person within the company who has sufficient understanding of the risks and rules of the algorithm applied.
Secondly, the risk management framework is sufficiently robust to manage risks associated with the offering of automated discretionary portfolio management services including cyber security resilience.
Thirdly, the outcomes produced by the algorithm must be consistent with the digital investment manager’s strategy.
Fourthly, the board must ensure written policies are in place to monitor and regularly test the algorithm employed.
The SC said licensed portfolio management companies may provide digital investment management services if they satisfy all the requirements in the updated Licensing Handbook and relevant guidelines.
Those who wish to offer digital investment management services may apply for the new licence effective Tuesday.
The updated Licensing Handbook and the Guidelines on Compliance Function for Fund Management Companies are available at https://www.sc.com.my/
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