SC introduces Focus Scope Assessment approach to gatekeeping

KUALA LUMPUR: The Securities Commission has introduced the Focused Scope Assessment (FSA) for new eligible Capital Market Intermediaries (CMIs) and Recognised Market Operators (RMOs).

In a statement, the regulator said the FSA, which takes effect immediately via amendments to the Guidelines on Recognised Markets, is part of the regulator’s new gatekeeping approach in light of the capital market’s growing maturity and evolving regulatory standards.

According to SC chairman Datuk Seri Awang Adek Hussin, the fundraising and investment channels via the private market had been on a steady growth for micro, small and medium enterprises (MSMEs) to tap into funds for their expansion plans.

“As at Q3 2023, the equity crowdfunding (ECF) and peer-to-peer (P2P) platforms have collectively raised approximately RM5.9bil, benefiting almost 10,000 MSMEs.”

“This commitment to develop a more progressive and robust regulatory framework reflects the SC’s recognition of the crucial role these businesses play in driving the nation’s growth and development,” he added.

The SC said the FSA evaluates the applicant’s operational and regulatory readiness in a more targeted and efficient manner.

It aims to shorten the time to market for CMIs and RMOs to three months, where previously it could take more than six months.

The FSA will also require applicants to have an independent party validating their business policies and procedures as part of their submission to the SC.

"This will give the applicant more control in ensuring efficiency and encouraging readiness to observe the requirements to undertake a regulated activity," said the regulator.

Notwithstanding the above requirement, the SC continues its regulatory obligation in assessing applicants on critical areas including fit and properness, governance and key risk areas.

It said amendments to the Guidelines on Recognised Markets were also made to set the stage for a level playing field for all RMOs, particularly in ensuring the adequacy of financial resources to commence operations in a fair and orderly manner.

Notably, the capital requirement of RM5mil is now extended to new operators of Equity Crowd Funding.

Additionally, amendments to the Guidelines on Recognised Markets include the strengthening of practices against financial crimes, such as money laundering and terrorist financing.