Name
Global FinTech Guide
Country _ Name
Malaysia
SectionTitle
Financial advisory and broking services including robo advisory and auto-trading
Body
FinTechs belonging to this category offer advisory and broking services for investments usually via an internet platform.

Robo advisory services usually offer an investment proposition following a series of questions concerning the personal financial background and the risk-bearing capacity of the user. Sometimes the respective platform also enables the user to directly execute the proposed investment.

Auto-trading concerns all services which automatically trade on behalf of the customer according to his or her specifications.

Apart from that some FinTechs collect and offer merely or as an ancillary service market information or operate comparison portals to increase the transparency of the capital markets and to help the investor with his decision-making.

There are also FinTech-advertising-services which advertise various financial services or products.

Introduction

Attitude of the country towards modern financial advisory and broking services

It is understood that the regulators are receptive of the innovation within this segment, and investors are increasingly embracing the option of entrusting their wealth with a robotic money management service.

Legal affairs

Obligations and requirements to provide financial advisory and broking services, or ancillary services described above

Such financial advisory services are a regulated activity under the CMSA. FinTechs providing services as described above must obtain a CMSL licence from the SC and submit at least two (2) applicants for a CMSRL.

As set out in the Licensing Handbook published by the SC, the annual license fee for any first Regulated Activity is RM2,000 (approximately USD460) and for any subsequent additional Regulated Activity is RM1,000 (approximately USD230). The annual license fee for a CMSRL is RM200 (approximately USD46). Furthermore, such FinTechs must maintain a minimum paid-up capital and shareholders’ funds of RM2,000,000 (approximately USD460,000) at all times.

SC will only authorise (includes grant of CMSL) an applicant if the application is in the ‘best interest’ of Malaysia. In determining what constitutes ‘best interest’, SC will give regard to any one (1) or more of the following:

    a) the area of specialisation and level of expertise that can be offered to the capital market including the effect on productivity, transference of skills and efficiency and quality of capital market services;
    b) the risk posed on the systemic stability of the capital market including activities and conduct that will likely impact the orderly functioning of the capital market;
    c) contribution towards attracting investments, enhancing market linkages, and promoting vibrancy in the capital market;
    d) ability in developing strategic or nascent sectors in the capital market; or
    e) the degree and significance of participation of Malaysian in the capital market.

In Malaysia, the term “digital investment management” is used rather than “robo-advisory” as the SC intends to facilitate a specific scope of Regulated Activity under the digital investment management framework which is automated discretionary portfolio management and therefore must also comply with the Guideline on Compliance Function for Fund Management Companies. This means that the digital investment management provider’s services must involve automation of core components of portfolio management services including risk profiling, suitability assessment, asset allocation and rebalancing.

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