KUALA LUMPUR (Sept 21): The Securities Commission Malaysia (SC) is working on encouraging greater regulatory technology (RegTech) adoption among participants and facilitating growth in RegTech innovation given its potential.

“The SC aims to see greater use of data, analytics and technology by market participants to improve efficiency, maintain market integrity and protect investors,” it said in its Capital Market Masterplan 3 (CMP3).

RegTech involves solutions that enable a more efficient and effective approach towards managing risks, client onboarding as well as regulatory reporting, compliance and monitoring. 

Some examples of RegTech commonly used for financial intermediaries are seen in the areas of Know Your Customer (KYC), transaction monitoring, anti-money laundering (AML) screening, fraud prevention, compliance risk analysis and regulatory reporting.  

The SC said that RegTech solutions demonstrate benefits that can enhance the capital market’s overall efficiency in mitigating material risks and maintaining market integrity. It believes that RegTech can play a role in enabling market participants to self-monitor compliance requirements and detect lapses in a timely manner as the SC looks to promote greater self-regulation within the capital market.

The regulator said that engagements with market participants and technical experts to identify areas where RegTech has the greatest impact are under way.

“This will be a continuous process, where inputs from these engagements will be used to identify RegTech priorities and inform the development of RegTech in Malaysia,” it said.

SC also said that collaborative efforts with the broader industry are key in expanding RegTech knowledge among market participants, adding that greater knowledge will be fundamental to spur RegTech growth, innovation and adoption.

In order to facilitate greater RegTech innovation, the SC will be putting into place collaborative platforms to facilitate industry-wide discussions to synthesise innovative ideas of RegTech.

The regulator added that events such as hackathons or TechSprints will also be considered to catalyse RegTech development in areas that could potentially unlock significant value for the capital market.

“Where relevant, regulatory guidance can be provided to help RegTech solution providers navigate through regulatory requirements in the Malaysian capital market,” it said.

Read more stories about the Securities Commission's Capital Market Masterplan 3 (CMP3) here.