SC approves two new robo-advisers

At the SCxSC FinTech Conference 2019 yesterday, SC executive chairman Datuk Syed Zaid Albar (pic) said both robo-advisory platforms are expected to be fully operational in early 2020.

KUALA LUMPUR: Malaysia’s fintech scene has hit the next level after the Securities Commission (SC) gave its approval-in-principle to two more robo-advisers and a full approval for the country’s first cryptocurrency exchange.

Following the recent approval for Wahed – the first halal robo-adviser in Malaysia – the SC said it has approved in principle two robo-advisory platforms, Raiz and Robo Wealth, to commercially roll out their services in Malaysia.

At the SCxSC FinTech Conference 2019 yesterday, SC executive chairman Datuk Syed Zaid Albar (pic) said both robo-advisory platforms are expected to be fully operational in early 2020.

“Today, Malaysia has three licensed and fully operational robo-advisers, namely StashAway, MyTHEO and Wahed. We continue to see strong interest in this space and will pursue to facilitate its growth, ” he said.

For perspective, robo-advisers refer to digital platforms that offer algorithm-driven and automated financial planning services with little or no human supervision.

Malaysia’s regulatory framework for robo-advisers or Digital Investment Management was introduced in 2017.

Meanwhile, the regulatory framework for cryptocurrency exchange or Digital Asset Exchange (DAX) was introduced in January this year.

Three DAX operators, namely Luno Malaysia Sdn Bhd, Sinegy Technologies (M) Sdn Bhd and Tokenize Technology (M) Sdn Bhd were subsequently registered in June.

Out of these, Luno is the first cryptocurrency exchange in Malaysia to receive full approval to operate as a recognised market operator.

The London-headquartered company received the letter of approval on Oct 14.

In a statement issued yesterday, Luno South-East Asia general manager David Low pointed out that the company entered the Malaysian market in 2015 and became the largest digital asset exchange in 2017.

“We’ve been working closely with regulators and banks from day one and we’re now excited to be able to provide customers the ability to buy, sell and trade crypto on our platform.

“This is a significant achievement and shows the importance of digital assets today and the long-term value of cryptocurrency. We want to help educate Malaysians on how to safely buy, sell and store bitcoin and ethereum, using an exchange approved and regulated by the SC, ” said Low.

Robo-advisory services have been gaining traction globally, largely due to the low fees and low minimum investment requirement compared to conventional and traditional services.

According to a recent estimate by Backend Benchmarking, robo-advisers manage about US$440bil worth of assets globally.

In Malaysia, robo-advisory services are relatively new but have seen increased interest, especially among Millenials.

Singapore-based StashAway, which is Malaysia’s first robo-adviser, told StarBiz that it has more than 100,000 users from 77 countries on its platform in both Malaysia and Singapore.

StashAway Malaysia country manager Wong Wai Ken said the users are aged from 33 to 35 years old on average.

“From July 2017 to September 2019, the cumulative performance of StashAway’s portfolios fetched returns of between 9.5% (for the lowest risk portfolio) and 21.5% (for the highest risk portfolio), outperforming the FBM KLCI, which declined 11.2% over that same period, ” said Wong.

It is worth noting that StashAway charges 0.2% to 0.8%, while MyTHEO charges 0.5% to 1% in management fees. Wahed, on the other hand, imposes a rate of 0.79% on investments worth RM100 to RM499,000 and 0.39% on investments over RM500,000.

During the SCxSC FinTech Conference yesterday, Syed Zaid also spoke about the SC’s initiatives to enhance access to financing.

He said a total of 21 equity crowdfunding (ECF) and peer-to-peer (P2P) platforms registered with the SC have raised RM587mil for some 1,600 micro, small and medium enterprises (MSMEs) to date.

“We are pleased to note that these platforms continue to serve a number of MSME sectors, including high tech, education, retail, food and beverages and consumer products, and have attracted many new investors - especially young investors aged 35 and below, ” he said.

Syed Zaid added that the SC had registered three new ECF and five new P2P financing platforms this year alone.

Held since 2014, the SCxSC FinTech Conference organised by the SC is an annual platform for discussions on fintech developments which are relevant to the capital market. The two-day SCxSC FinTech Conference on Oct 22-23 is organised in partnership with Permodalan Nasional Bhd, Malaysia Digital Economy Corp and Rakuten Trade.

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