Securities Commission Malaysia widens access, offers more choices in fund management - New framework introduced for Foreign Exempt Schemes and enhancements to Offering of Wholesale Funds

27 September 2023

On 29 August 2023, the Securities Commission Malaysia (“SC”) introduced the Foreign Exempt Scheme (“FES”) framework which enhances onshore access to foreign investment funds. Wholesale fund managers can now have the flexibility to explore investment options in alternative investment products, extending beyond conventional assets such as securities, derivatives, money market instruments, and deposits.

The revised guidelines in relation to the measures above include:

  • Guidelines for the Offering, Marketing and Distribution of Foreign Funds (“OMD Guidelines”);
  • Guidelines on Unlisted Capital Market Products under the Lodge and Launch Framework (“LOLA Guidelines”)

OMD Guidelines

The revisions made to the OMD Guidelines include:

  • the introduction of the FES Framework, for the offering of foreign funds by local fund management companies or their related corporations to certain accredited investors and high-net worth entities of Part 1, Schedules 6 and 7 of the Capital Markets and Services Act 2007;
  • amendments to allow foreign exchange-traded fund (“ETF”) operators to list up to five non-plain vanilla ETFs (i.e. leveraged ETF, inverse ETF, and synthetic ETF), and introducing additional obligations for foreign ETF operators;
  • additional obligations relating to the roles and responsibilities of parties involved in a submission to the SC for foreign funds; and
  • amendments made to Qualifying Collective Investment Scheme-related provisions to reflect the admission of a new signatory to the ASEAN Capital Markets Forum (ACMF) Memorandum of Understanding on Streamlined Authorisation Framework for Cross-Border Public Offers of ASEAN Collective Investment Schemes and the issuance of the ASEAN Sustainable and Responsible Fund Standards.

LOLA Guidelines

The revisions to the LOLA Guidelines expand the permissible investments of wholesale funds including investment via special purpose vehicles, while introducing the FES framework. There were also editorial amendments to enhance clarity on certain requirements.