KUALA LUMPUR (Feb 5): The Securities Commission Malaysia’s (SC) new 1.5% revenue-based levy on brokers, which took effect on Jan 1, 2026, is imposed only on gross revenue derived from regulated capital market activities and excludes other business operations and group-level income, according to the Ministry of Finance (MOF).

In a written parliamentary reply on Thursday, the MOF said the approach ensures the annual fee is directly linked to activities regulated by the SC, with the amount payable proportionate to the scale of regulated activities and the level of supervisory effort required.

The MOF also clarified that the annual fee does not include proprietary trading transactions, margin financing interest income, interest from money market placements, or dividends and gains from proprietary investments, as these do not arise directly from regulated capital market activities.

The MOF said using profitability as the basis for fee assessment would be inconsistent and unreliable, as the SC is still required to regulate brokers even when they are loss-making.

It added that profitability can be distorted by differences in business models and internal cost allocations, particularly within financial groups where costs may be spread across multiple entities.

“The variable annual fee model is not unique to Malaysia, as many jurisdictions impose regulatory fees based on revenue from regulated activities regardless of whether entities record profits or losses, to ensure stable and sustainable funding for regulatory operations,” the MOF said.

In response to industry concerns, the MOF said the SC has announced a three-year transition period from 2026 to 2028, during which a 50% reduction will be applied to the variable annual fee.

A 20% reduction will also be granted for certain transaction fees, particularly those related to capital market products and fundraising activities, it noted.

For more Parliament stories, click here.