SC Malaysia unveils three initiatives to spur innovation at SCxSC Fintech Summit 2024
By Digital News Asia October 3, 2024
- Regulatory sandbox, securities tokenization, tokenized bonds with Khazanah
- Tech-agnostic approach for tokenised securities and identify best practices
In a positive development for the blockchain ecosystem in Malaysia, the Securities Commission Malaysia (SC) announced on Tuesday that it will introduce a regulatory sandbox and enhance its regulatory framework to encourage securities tokenisation to help spur innovations in the capital market.
The SC will also be collaborating with Khazanah Nasional, the country’s sovereign wealth fund, to explore the issuance of tokenised bonds, on how blockchain technology can enhance the efficiency of bond issuance and operations. This initiative explores the use of smart contracts and custodial arrangements.
The initiatives, unveiled at the two-day SCxSC Fintech Summit 2024 this week, are aimed at promoting responsible innovation in the country’s capital market. About 1,000 people are estimated to have attended the summit that ended yesterday.
SC Chairman Mohammad Faiz Azmi (pic, below) said the SC is committed to foster a thriving fintech ecosystem in the capital market. “To drive innovation in the capital market, the SC is taking a holistic approach. Through initiatives like the regulatory sandbox and SCxSC, we enable industry experimentation and foster collaboration with the broader ecosystem.”
Recognising rapid technological advancements, the SC has received several proposals that did not fully fit within existing regulatory frameworks. To address this, the SC is introducing a regulatory sandbox framework, providing a controlled environment for testing innovative products and services while ensuring investor protection.
Corporations developing solutions in areas like financial inclusiveness, Islamic finance and retirement solutions are encouraged to apply.
The sandbox is a regulatory tool for enhancing policies to ensure they are fit for purpose. For example, it may allow innovative tokenised offerings to be tested within the sandbox, in line with the SC’s efforts to develop its technology-agnostic approach for tokenised securities and identify best practices.
In this respect, the SC will develop a guidance early next year for intermediaries to understand and manage associated risks in relation to securities tokenisation.
Corporations have until April 2025 to apply for the first cohort of the Sandbox.
Interested parties are required to participate in pre-consultation sessions prior to submission. These sessions are available immediately, and interested parties can begin engagements by emailing [email protected].
Accepted applications will have up to 12 months to test their products or services.
Eligibility criteria include offering innovative capital market products or services that are not currently available in Malaysia and do not fully fit under existing regulatory framework that bring value to the market.
This year’s edition of the SCxSC Fintech Summit focused on the use cases and opportunities of emerging technologies like artificial intelligence and blockchain in the capital market.
For the past 10 years, the Summit has served as a platform for fintech communities to engage, network and explore fintech-driven opportunities.
The SCxSC Fintech Summit 2024 also featured the Demo Day of the SC FIKRA ACE Accelerator1 programme, where 10 startups pitched for the chance to be selected as 2024 cohort’s winners.
SCxSC aligns with the SC’s broader innovation agenda to harness technology, supporting the Capital Market Masterplan 3 (CMP3) objectives of catalysing economic growth, empowering investors and promoting a sustainable, inclusive stakeholder.
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