Capital Market Regulatory Framework and SC Licensing Requirements
This domain tests how the Malaysian capital market is regulated and who may operate in it. Expect questions on the statutory roles of the Securities Commission Malaysia (SC), the Capital Markets and Services Act 2007 (CMSA), Bursa Malaysia and the SIDC, plus the licensing gateway for firms and individuals.
Core rules
- The SC is the statutory regulator under the Securities Commission Malaysia Act 1993 and administers the CMSA.
- No person may carry on a business in a regulated activity without a Capital Markets Services Licence (CMSL). Individuals performing regulated activities for a CMSL holder need a Capital Markets Services Representative's Licence (CMSRL).
- Regulated activities include dealing in securities, advising on corporate finance, fund management, dealing in derivatives and advising on securities.
- Licensing is fit-and-proper based: honesty, competence, financial soundness and no relevant conviction, plus minimum capital, compliance arrangements and business-conduct rules.
- Bursa Malaysia operates the exchange; a listing permission is separate from SC licensing.
Worked example
A fintech proposes a robo-advisory app that builds ETF portfolios for retail clients. The activity is fund management or advising on securities, not mere software. The firm needs a CMSL for the relevant regulated activity, and each adviser needs a CMSRL. The algorithm, onboarding and disclosure must meet suitability and conduct rules. Marketing the service before licensing is itself a breach risk.
Traps
Assuming a Bursa broker licence covers every regulated activity; confusing firm and individual licences; treating business advice as unregulated when it concerns securities; overlooking that foreign firms generally need local licensing unless an exemption applies.