KUALA LUMPUR (April 22): The Securities Commission Malaysia (SC) said on Wednesday it is “quietly confident” of avoiding an operating deficit this year, partly thanks to the revamped fee structure that came into effect in January.

Noting that the regulator recorded a surplus in the first quarter, chairman Datuk Mohammad Faiz Azmi said the performance for the rest of the year will depend on market conditions.
 
“For the first quarter, we made a profit — in fact, more than expected — although some of that was due to non-recurring factors,” Faiz told reporters after the release of the SC's 2025 annual report. This, he noted, helped the regulator improve its financial stability after several years of reserve drawdowns.

The SC registered a net operating deficit of RM66.61 million in 2025, weighed by weaker market activity, according to the annual report. For 2024, it reported a net operating surplus of RM20.7 million.

The revised fee structure — the SC's first major review in more than three decades — is aimed at securing long-term financial sustainability and reducing reliance on volatile market-linked income.

About 70% of the regulator’s revenue is derived from variable sources, such as levies on share trading, making earnings highly sensitive to market cycles.

“As a regulator, that kind of volatility is not very healthy,” said SC managing director Datin Paduka Azalina Adham. Supervision, enforcement and investigation work does not change when the market goes up or down, she added.

The fixed-fee components have come into effect as part of SC plans to reduce dependence on trading activity while maintaining affordability for market participants.

The regulator has implemented a blanket 50% reduction in variable annual fees, alongside a 20% cut in transaction-related fees for products and fundraising activities to facilitate a smooth industry transition.

The SC is also working to rebuild its financial buffers after drawing down between RM200 million and RM300 million in reserves over the past five years, including about RM50 million in 2024–2025.

“We need to rebuild our reserves first before we can consider further adjustments,” Faiz said. “If we generate excess income, we will consider how to return it to the market."

The SC has set a three-year target to restore reserves to around RM1 billion, which would provide a sufficient cushion against future market volatility.