SC introduces Digital Investment Management framework
KUALA LUMPUR: The Securities Commission Malaysia (SC) has introduced the Digital Investment Management framework, setting out licensing and conduct requirements for the offering of automated discretionary portfolio management services to investors.
Digital investment management is a fund management business which incorporates innovative technologies into discretionary portfolio management services.
The SC said the framework is part of its digital agenda for the capital market and aimed at providing investors with a more convenient, affordable and accessible channel to manage and grow their wealth.
“To re i n force investor protection, specific conduct requirements that commensurate with the distinctive characteristics of this new business model have been set out,” the SC said during the Digital Investment Management Technical Briefing yesterday.
This, it said, included the requirement for the board to be accountable for the governance of the digital investment management business by ensuring that the requisite technology capabilities are in place, including identification of competent persons within the company with sufficient understanding of the risk and rules of the algorithm applied, among others.
The board must also ensure that the risk management framework is sufficiently robust to manage risks associated with the offering of automated discretionary portfolio management services, including cyber security resilience.
The outcomes produced by the algorithm must also be consistent with the digital investment manager’s strategy, and written policies must be in place to monitor and regularly test the algorithm employed, the SC said.
“Licensed portfolio management companies may provide digital i nvestment management services if they satisfy all the requirements in the updated Licensing Handbook and relevant guidelines,” it added.
Those who wish to offer digital investment management services may apply for the new licence beginning today, while the Lincensing Handbook and the Guidelines on Compliance function for Fund Management Companies is available at www. sc.com.my. — Bernama