KUALA LUMPUR (Feb 5): The Securities Commission Malaysia (SC) has announced an expansion of sophisticated investor categories, effective Monday, through the introduction of the new "Guidelines on Categories of Sophisticated Investors".

Key features of the expansion include the introduction of a "Knowledge and Experience" category, considering the knowledge and experience of sophisticated investors. Additionally, enhancements to current categories offer flexibility in existing financial thresholds for high net worth individuals.

The new "Knowledge and Experience" category accommodates individuals who may not meet financial tests but can demonstrate financial knowledge sophistication to engage in relevant market offerings.

This category assesses potential investors based on their education, recognised financial association membership, and practical experience in sectors such as banking, capital markets, or insurance.

Another crucial change is the inclusion of an investor's primary residence value, capped at RM1 million, in assessing their qualification as a sophisticated investor.

The definition of a joint account is also expanded to encompass accounts with a spouse or child, including total net joint annual income and investment portfolios. This expansion offers a more accurate representation of a family's collective financial status and investment potential.

In a statement on Monday, SC said the expansion's primary aim is to strengthen capital market accessibility, maintain competitiveness, and encourage increased investor participation.

SC chairman Datuk Seri Dr Awang Adek Hussin emphasised that the evolving sophistication of the Malaysian capital market has resulted in diverse financing needs and varying 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.

He highlighted the capital market's growth to RM3.8 trillion in 2023 from RM3.6 trillion in the previous year, presenting significant opportunities to attract a more diverse investor base and encourage greater capital flow into sophisticated product and market segments.