KUALA LUMPUR: The Securities Commission (SC) and Bursa Malaysia Securities Bhd will cooperate to enable a facilitative market structure, allowing for more flexible business models with greater efficient capital structure through the separation of trading and clearing memberships on the exchange.
SC chairman Datuk Syed Zaid Albar said the models include digital-only brokers, algorithm-based trading platforms, multi-asset brokers for sophisticated investors.
He said the SC is committed to facilitating a broader flexible model for intermediaries in the local capital market to cater to the increasingly diverse investors appetite.
The aspiration was echoed following Finance Minister Tengku Zafrul Aziz's announcement at the 16th Invest Malaysia, held virtually for the first time since its inception in 2004.
Syed Zaid said the market structure must evolve to enable this model, citing that the SC will facilitate changes to the stockbroking licensing framework that will allow for entrants of new players with differentiated value propositions.
He said the Covid-19 pandemic has forced governments, regulators and industry players alike to reflect on the current landscape and systems, prompting them to rebuild for a more resilient, sustainable and inclusive future.
"The Malaysian investor population has grown to be a lot more diverse, and technological advancements have changed the way investors interact with the capital market.
"It is important that our industry also evolves to meet the diverse needs of investors. These can be in the form of digital-only brokers that can cater to investors looking for no-frills services, or for example, algorithmic trading platforms or multi-asset brokers for more sophisticated investors," Syed Zaid said via a virtual conference at Invest Malaysia 2020 ceremony here today.
He said there is a need to intermediate surplus saving, citing that individuals deposits in the banking system have grown from RM379 billion in early 2010 to RM779 billion in May 2020 or about half of the market capitalisation in Bursa Malaysia.
"We are certainly open for discussion with market participants to provide a fit-for-purpose solution. Much of our economic growth today is driven by smaller innovative businesses that are outside the public market. I believe investors recognise this, which is why they are increasingly looking at private markets for returns," he said.
SC's mid to long-term strategy will focus on widening the range of investment products and access points including facilitating alternative investments in the private markets.
"With this, we believe it will enable more flexible models with efficient capital structure and attract a larger pool of specialised market participants which we hope will spur greater capital market innovation and enhance value for our investors," he said.