The Securities Commission Malaysia (SC) plays a pivotal role in developing and regulating Malaysia’s capital markets. As the statutory regulatory body, the SC works to ensure fair, efficient, and transparent markets, and to protect investors’ interests. This in-depth article will provide key insights into the SC, including its history, organizational structure, core functions, regulatory framework, notable initiatives, and outlook.


Malaysia has one of the most developed capital markets in Southeast Asia, currently ranked 3rd in ASEAN. The SC has been instrumental in nurturing the growth and integrity of these markets. Its progressive regulatory framework and investor-centric focus has helped Malaysia become a leading destination for fund raising and investment.

This article will provide a comprehensive look at the SC’s origins, objectives, operations, achievements and future direction. For those interested in Malaysian securities regulation or investing in the country’s capital markets, it serves as an authoritative guide.

History and Background

The SC was established on 1 March 1993 under the Securities Commission Act 1993. This Act grants the SC powers to regulate and develop the Malaysian capital market. Prior to this, regulation was overseen by the Capital Issues Committee formed in 1968.

The SC is modeled after the Securities and Exchange Commission (SEC) in the United States. It has evolved from just a regulator to an agency that both regulates and develops the market. Some key milestones include:

  • 1994: Launched second Board of KLSE for SMEs
  • 1995: Implemented screen-based trading system for improved transparency
  • 1999: SC became a full statutory body separate from Central Bank
  • 2004: Revamped takeover rules to better protect minority shareholders
  • 2009: Launched investment account platform for Islamic banking
  • 2012: Established Audit Oversight Board to oversee auditors of public-interest entities
  • 2017: Listed world’s first digital sukuk on stock exchange

Today, the SC administers Malaysia’s securities laws, regulates all entities in the capital market, and drives strategic initiatives to spur growth. It will continue enhancing frameworks to keep markets competitive while prioritizing investor protection.

Organizational Structure

The SC consists of several integral divisions and departments:

  • Chairman’s Office – Provides overall leadership in executing the SC’s strategy and regulatory mandate.
  • Corporate Resources – Covers functions like finance, human capital, IT, internal audit, procurement, and corporate affairs.
  • Digital Strategy & Innovation – Focuses on technology adoption across SC and the capital market.
  • Enforcement – Detects and deters misconduct through surveillance, investigation and enforcement.
  • Islamic Capital Market Development – Develops the Islamic capital market and promotes Malaysia as a hub for Islamic finance.
  • Regulatory Policy & Advisory – Formulates policies and provides technical advice for regulation of the Malaysian capital market.
  • Supervision – Oversees the risk management and supervision of market institutions.
  • Strategy – Drives organizational excellence through strategic planning and enterprise risk management.

This structure allows the SC to effectively carry out its dual mandate of regulation and market development. The Chairman heads the Commission Members who set policies and direction. Various oversight committees and expert panels provide input into regulatory frameworks and industry growth strategies.

Vision and Mission

The SC’s vision is “To be an internationally respected regulator and facilitator of a capital market that contributes to Malaysia’s prosperity and global competitiveness”.

Its mission is “To promote and maintain fair, efficient, secure and transparent securities and futures markets and to facilitate the orderly development of an innovative and competitive capital market”.

Core Functions

The SC carries out several core functions in line with its statutory objectives:

Regulating the Marketplace

  • Registering prospectuses for fundraising exercises like IPOs.
  • Licensing and monitoring market operators and professionals.
  • Overseeing corporate takeovers and mergers.
  • Setting disclosure standards on corporate governance and financials.
  • Enforcing securities laws and regulating market misconduct.

Developing the Capital Market

  • Recommending reforms to keep markets efficient and competitive.
  • Promoting access to financing for businesses of all sizes.
  • Expanding channels for investor participation.
  • Broadening range of tradable products and services.
  • Building capacity through consultations and education.

Protecting Investors

  • Advocating for the rights of individual and institutional investors.
  • Establishing proper safeguards and controls for investor protection.
  • Promoting fair treatment of investors by public-listed companies.
  • Running public awareness campaigns on investing safely.
  • Providing avenues for dispute resolution and redress for investors.

The SC balances robust regulation with business-friendly reforms to facilitate stable capital market growth and guard against excesses. It also gives highest priority to safeguarding investors through appropriate checks and balances.

Regulatory Approach

The SC employs a multifaceted regulatory approach:

  • Rules-based – Clear rules set minimum standards all market participants must adhere to.
  • Disclosure-based – Timely and accurate disclosures allow investors to make informed decisions.
  • Self-regulation – Industry associations enforce professional standards and ethics.
  • Risk-based supervision – Oversight is proportional to the risks an entity poses.
  • Outcomes-focused – Regulation aims to achieve intended investor protection outcomes.
  • Collaborative – Close coordination with other regulators locally and abroad.

This allows the SC to establish clear rules, promote transparency, leverage industry expertise, allocate resources efficiently, stay adaptable, and take a coordinated approach.

Key Regulations and Guidelines

The SC administers securities laws passed by Parliament, as well as directives, codes, and guidelines it is empowered to establish. Some noteworthy examples include:

  • Securities Commission Act 1993 – Establishes the SC and its functions.
  • Capital Markets & Services Act 2007 – Consolidates the regulatory framework for fundraising and market conduct.
  • Securities Industry (Central Depositories) Act 1991 – Provides for regulation of central depository systems.
  • Guidelines on Prevention of Money Laundering & Terrorism Financing – Sets out AML/CFT obligations of capital market intermediaries.
  • Guidelines on Unlisted Capital Market Products – Streamlines approval process for new unlisted instruments.
  • Guidelines on Sales Practices of Unlisted Capital Market Products – Enhances sales conduct and disclosure standards.
  • Malaysian Code on Corporate Governance – Outlines principles and best practices for corporate governance.

The SC regularly reviews existing regulations and introduces new guidelines in response to market developments. It undertakes extensive consultations with stakeholders in formulating regulations.

Corporate Governance Reforms

A major priority for the SC has been enhancing standards for corporate governance, accountability and shareholder rights. Some notable reforms include:

  • Minority Shareholder Watchdog Group (MSWG) – Formed in 2000 to advocate minority shareholder rights.
  • Malaysian Code on Corporate Governance – First launched in 2000 to enshrine corporate governance best practices.
  • Corporate Governance Blueprint 2011 – Launched reforms to strengthen board effectiveness and accountability.
  • Corporate Governance Strategic Priorities 2016-2020 – Targeted culture of good governance and sustainable value creation.
  • Enhanced Auditor Report – Now requires external auditors to opine on key risks and internal controls.
  • Comply-or-Explain Regime for Corporate Governance – Improves quality of disclosures on governance practices.

The SC has collaborated closely with Bursa Malaysia, MSWG, professional bodies, listed companies, investors and other stakeholders in driving these reforms. Malaysia is now highly rated for its corporate governance framework in the region.

Islamic Capital Market Development

As a leading centre for Islamic finance, Malaysia is also at the forefront of Islamic capital market development. The SC introduced its Islamic Capital Market Masterplan in 2006 which provides the blueprint for growth strategies. Under this, the SC has achieved several international firsts:

  • First sovereign sukuk in 2002
  • First Islamic exchange-traded fund and structured product in 2006
  • First Islamic real estate investment trust in 2006
  • First Shariah-compliant gold trading platform in 2010
  • First Digital Investment Management framework for robo-advisory in 2016
  • First green sukuk in 2017

Islamic fund management has expanded in diversity and size, cementing Malaysia’s position as the largest Shariah-compliant fund management centre. The SC will continue spurring innovation and cross-border flows to grow this sector.

Investor Empowerment and Education

A key part of the SC’s agenda is empowering investors through education. Its main initiatives include:

  • InvestSmart® Festivals – Reaches out to retail investors nationwide through investment education festivals.
  • InvestSmart® App – Mobile app to help new investors understand investing essentials.
  • RinggitPlus – Online portal featuring unbiased resources, tools, and community forums for investors.
  • SC in the Community – Year-round investor outreach programs throughout Malaysia.
  • Pocket Sense – Bite-sized videos offering concise investment insights.
  • 12th Invest Malaysia – Annual investor education conference featuring industry experts.

The SC runs active public awareness campaigns through various channels, including social media, to promote smarter investing. These initiatives have enabled ordinary Malaysians to participate in the capital market and reap its benefits.

Fintech Development

Recognizing how financial technology can drive innovation and efficiency, the SC established its Fintech team in 2016. It has since introduced frameworks for digital investment management, equity crowdfunding, peer-to-peer financing, and more.

The SC’s Fintech enablement efforts include:

  • Regulatory sandboxes to facilitate testing of innovations.
  • Supporting the Malaysian Fintech Association.
  • Tax incentives for fintech companies and angel investors.
  • MOUs with other regulators to facilitate cross-border testing.
  • Fintech Booster and Fintech Bridge programs to link startups with incumbent financial institutions.
  • Annual SCxSC Fintech Conference bringing together industry players and regulators.

These efforts have accelerated fintech adoption while safeguarding consumers and system stability. Malaysia is now among the leaders within ASEAN in nurturing a vibrant fintech ecosystem.

Outlook and Priorities Ahead

Looking ahead, the SC will focus on:

  • Further enhancing corporate governance culture and shareholder rights protection.
  • Widening access to financing and investments for unserved and underserved segments.
  • Harnessing technologies to make processes more efficient and user-friendly.
  • Strengthening competitiveness of Malaysian capital market to attract foreign portfolio investment.
  • Expanding focus on sustainability and climate-related risks across the marketplace.
  • Developing innovative solutions for social finance and philanthropy.
  • Collaborating across borders to facilitate cross-listing and mutual recognition.

The SC aims to balance stability, efficiency, integrity, and inclusiveness as the capital market evolves. It will continue adapting its regulatory approach to changing risks and opportunities while keeping investors’ interests at the core. With its progressive and collaborative strategies, Malaysia’s capital market is poised for sustainable long-term growth.


The Securities Commission Malaysia plays an indispensable function in governing and growing the capital market. Its three-pronged focus of robust yet agile regulation, market expansion and investor protection has served Malaysia well. Ongoing enhancements to its frameworks and global collaborations will ensure Malaysia’s capital market remains resilient and vibrant. For those looking to invest or raise funds in Malaysia, the SC provides the regulatory certainty and investor safeguards to inspire confidence.