SC broadens investor categories
Regulator’s new criteria include wider range of people
“The refined HNWI threshold calculation acknowledges the importance of real estate investments and lowers the entry barrier.”
Datuk Ismitz Matthew De Alwis
PETALING JAYA: The Securities Commission (SC) has broadened the scope of sophisticated investor categories to increase capital markets accessibility.
Its chairman Datuk Seri Awang Adek Hussin said the growing sophistication of the Malaysian capital market has resulted in varied financing needs and investment risk appetites.
“The criteria for sophisticated investors have been broadened to include a wider range of individuals who can contribute to the market’s growth and stability,” he said in a statement yesterday.
The regulator said the new “Guidelines on Categories of Sophisticated Investors” documents, which is available on its website, will take effect immediately.
It said this reinforced the SC’S commitment to maintain capital market competitiveness and vibrancy, while promoting greater investor participation.
Key features of the expansion include a new category that takes into account the knowledge and experience of sophisticated investors, the SC said.
There have also been enhancements to current categories that allow for flexibilities of existing financial thresholds for high net worth individuals (HNWI).
The new “Knowledge and Experience” category will benefit individuals who do not meet financial tests, but are able to demonstrate financial knowledge sophistication to participate in relevant market offerings, it said.
This category will assess potential investors based on their education, recognised financial association membership and practical experience in relevant sectors such as banking, capital markets or insurance.
Another key change is the inclusion of an investor’s primary residence value, up to a cap of Rm1mil, in assessing their qualification as a sophisticated investor, said the regulator.
Meanwhile, it also said the definition of a joint account has been expanded to incorporate accounts with a spouse or child, including total net joint annual income and investment portfolios.
“This expansion will better depict a family’s collective financial status and investment potential,” said the regulator.
Awang Adek said this change presents significant opportunities for the market to attract a more diverse investor base regionally and encourage greater capital flow into sophisticated product and market segments.
Commenting on this change, Kenanga Investors Bhd chief executive officer and executive director Datuk Ismitz Matthew De Alwis said the new updates on investor classification guidelines are expected to make the Malaysian capital market more inclusive and dynamic.
“The refined HNWI threshold calculation acknowledges the importance of real estate investments and lowers the entry barrier.
“Now, besides looking at qualifications, the lowering of subsequent top-ups from RM250,000 will encourage sustained investments while maintaining responsible diversifications,” Ismitz told Starbiz.
“We hope all these steps will energise our investment ecosystem and liquidity,” he added.
Meanwhile, CFA Society Malaysia’s director Wong Chi Xiang said he welcomed the release of the Guidelines on Categories of Sophisticated Investors by the SC.
“The widening of the sophisticated investor categories to include active membership of the CFA Institute is a recognition of the access to professional knowledge provided by the CFA programme,” Wong said.
He added that this included investment management, alongside the CFA Society’s commitment in promoting the highest standards of ethics and professional excellence vis-à-vis the capital market.