KUALA LUMPUR (March 9): Malaysia will introduce AI-based digital screening tools for shariah compliance and environmental, social and governance (ESG) alignment to enhance the visibility and scalability of investment products across regional markets, the Securities Commission Malaysia (SC) said.

The move reflects growing demand from investors — institutional funds, family offices and retail — for exposure to regional, innovative and value-based investment products, driven by beta activism and next-generation preferences for non-traditional investment channels, the SC said in the fourth Capital Market Masterplan (CMP4), which spans 2026-2030.

The SC said it will work closely with Bursa Malaysia and industry players to create a more facilitative environment for product innovation, domiciliation and deal execution by refining regulations and collaborating with regional regulators to harmonise standards and address impediments.

“The SC may undertake co-development initiatives with regional market participants aligned with the needs and standards of regional investors. Measures such as AI-based screening tools for shariah compliance and ESG alignment will help improve cross-border product visibility and scalability,” it said.

Local intermediaries are also encouraged to explore partnerships with global or regional institutions to co-manufacture, domicile or list regional products in Malaysia and expand their global distribution platforms.

“Intermediaries should seize the opportunity to develop products that meet investors’ diversification needs and their growing appetite for thematic investing,” the SC added.

The CMP4 also envisions the leveraging of strong regional economic growth prospects, along with Malaysia’s leadership in Islamic finance and sustainable finance, to develop innovative, high-impact investment products.

The SC will continue to promote the development of innovative products, including depository receipts, thematic exchange-traded funds (ETFs) and regionally focused investment funds. 

Click here for all you need to know about the Capital Market Masterplan 2026-2030.