KUALA LUMPUR (March 20): The Securities Commission Malaysia (SC) is looking to implement a new fee structure for capital market intermediaries by 2026, as part of efforts to increase revenue to cover its operation costs.

SC executive chairman Datuk Mohammad Faiz Azmi said the commission is committed to maintain open and continuous engagement with capital market institutions and participants to ensure inclusivity and transparency.

Stakeholders' input will be refined into the fee proposal to enhance fairness and effectiveness, ensuring that the proposed fee does not materially impact market participants.

"I do not want it [the fee] to be so painful that they have to pass the cost to the consumers," he said during a press conference on Thursday in conjunction with the release of SC's Annual Report 2024. “The intention is not to make profit. The intention is to cover our costs.”

When asked about the quantum of the proposed fee, Faiz said that the fee structure will be based on a variable model rather than a fixed fee, as the latter could be burdensome during market downturns.

“But we're not wedded to the percentage. There are some very large asset managers which would have to pay us a lot of money if I applied that formula, so we've agreed to cap it,” he explained.

“[The fee] will vary from class to class. So for example, right now if you're a unit trust consultant, you only pay RM50, so it's going to be more than RM50. And even some of the licences, I think on average, we charge about RM2,000 per licence. That has to go up,” Faiz added.

The proposal for the new fee structure, which will be imposed on financial intermediaries such as asset managers, stock brokers and recognised market operators, will be submitted to the Ministry of Finance by the end of March 2025, Faiz added.

SC aims to engage over 100 stakeholders — including exchanges groups, investment banks and asset management firms — in discussions to ensure that the new fee structure would not affect their profitability and lead to cost transfer to market participants.

The proposed fees, the regulator added, will be designed based on size, complexity and level of activity to establish an equitable contribution framework for all capital market participants and products.

Faiz contended that the implementation of the new fee structure is necessary as the SC has not changed its fees for over 30 years since its inception, while its costs have continued to grow due to extensive subsidies it provides to the market.

Several subsidised costs borne by SC, the chairman highlighted, include RM3 million annually for the audit oversight board, RM1.5 million for providing free Shariah screening, and RM4 million annually to fund for the training organisation Securities Industry Development Corporation (SIDC).

"SC is the only one paying it so we do not think that it is fair because everyone is benefitting (from) essentially a well-managed market, so we think you [market intermediaries] should contribute a bit," he said.

The SC managed to narrow its losses significantly in 2024, reporting a total comprehensive net loss of RM2.11 million for the financial year ended Dec 31, 2024, compared with a net loss of RM107.86 million in 2023. In the year prior, its net loss stood at RM18.34 million.

However, it recorded an operating surplus of RM20.7 million in 2024, rebounding from its largest net operating deficit in over a decade in 2023, thanks to stronger market activity during the year.

Levies remained its primary revenue contributor, as this surged 45.2% to RM209.52 million from RM144.34 million in 2023, after a marginal 4.5% increase in 2022. Income from fees and charges climbed 65.7% to RM27.47 million from RM16.58 million in 2023, reversing a 16.3% decline the previous year.

For more SC 2024 Annual Report stories, click here.