This article first appeared in The Edge Malaysia Weekly on February 16, 2026 - February 22, 2026

News that the Securities Commission Malaysia (SC) is set to introduce a framework to clarify licensing requirements for cash trust schemes that invest in capital market products must have been well-received by market players, investors and consumers alike. It plugs a loophole that allowed such schemes to be sold to the public as investment products, but without the appropriate regulatory oversight.

In a written parliamentary reply last week, the Ministry of Finance (MoF) said the SC is in the midst of finalising the framework, which will initially cover only capital market-related activities. The move comes amid concerns over cash trust schemes and their impact on investors and confidence in the country’s financial markets.

According to the MoF, cash trust schemes are managed by trust companies registered with the Companies Commission of Malaysia (SSM) under the Trust Companies Act 1949. They are also subject to the Trustee Act 1949.

Since Jan 1 this year, the SC’s authority has been expanded to determine which trust companies and controlled activities do not require a licence, following amendments to the Capital Markets and Services Act 2007.

The MoF noted that the SC has been taking action in this area, including prosecuting a trust company for conducting controlled capital market activities without a licence, engaging with the Association of Trust Companies Malaysia for benchmarking, investigating several trust companies suspected of unlicensed activities, and conducting public awareness campaigns on the features and risks of cash trust investments.

The ministry stressed that the SC will continue to strengthen supervision and take firm follow-up action to ensure compliance and protect investors.

The SC and SSM have also agreed to collaborate strategically and comprehensively, with a joint framework being developed to define scope, roles and mechanisms for coordinated action against cash trust-related issues.

This is a move in the right direction.

Nevertheless, the SC must move fast to come up with the framework for cash trust schemes and undertake efforts to educate the public on the different types of trust companies, the risks involved in cash trusts and ensure that their rights are protected.

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's App Store and Android's Google Play.