KUALA LUMPUR (Aug 29): In line with measures to liberalise the fund management industry, the Securities Commission Malaysia (SC) has introduced the Foreign Exempt Scheme (FES) framework that provides high-net-worth entities and institutional investors greater onshore access to foreign investment funds.

The SC also introduced flexibility to wholesale fund managers seeking to invest in alternative investment products beyond the current conventional assets such as securities, derivatives, money market instruments and deposits.

“These measures demonstrate the SC’s continuous commitment to enhance the depth and breadth of the capital market. The SC’s effort also aims to ensure an effective regulatory regime that facilitates product innovation while fostering an inclusive investment environment for investors with various risk appetites and needs,” the SC said in a statement on Tuesday.

Its chairman Datuk Seri Dr Awang Adek Hussin said that by giving access to a wider range of investment options, high net worth entities and institutional investors will have more opportunities to diversify their portfolios.

“The FES framework opens up new avenues for high-net-worth entities and institutional investors to access funds offered by foreign players that are a related corporation to an SC-licensed fund management company,” he said.

“Additionally, these measures enable the fund managers to offer more products and investment choices to investors locally, aligning with the SC’s efforts to promote innovation and accessibility.

The revised guidelines relating to these measures, which will take effect on Aug 29, 2023, include:

a.Guidelines for the Offering, Marketing, and Distribution of Foreign Funds (OMD Guidelines).

b.Guidelines on Unlisted Capital Market Products under the Lodge and Launch Framework (UCMP Guidelines).

The revised OMD guidelines also allow secondary listing of non-plain vanilla foreign exchange-traded funds (ETF), promoting more investment opportunities in the Malaysian market. This is subject to five such ETFs per foreign operator.

The enhancements to the guidelines provide clarity on expectations regarding the responsibilities of submitting parties for foreign funds, ensuring a clear and streamlined process, the SC said.

More information on the FES framework and the revised OMD and UCMP Guidelines are available on the SC website at https://www.sc.com.my/regulation.