Introduction
On 23 May 2022, the Securities Commission Malaysia (SC) and the Labuan Financial Services Authority (Labuan FSA) signed a Memorandum of Understanding (MoU) to strengthen regulatory cooperation, enforcement and supervisory collaboration.
The agreement builds on the cooperation framework established in 2004 and aims to support the development, stability and integrity of Malaysia’s capital markets.
According to the joint announcement, the MoU establishes a stronger framework for both regulators to collaborate in areas of mutual interest, including risk monitoring, information sharing and regulatory supervision.
Key objectives of the MoU
The agreement focuses on several important areas:
1. Regulatory cooperation. SC and Labuan FSA aim to improve coordination on regulatory policies and address potential overlaps between their respective regulatory frameworks.
2. Information sharing. The agreement provides a framework for exchanging relevant information, subject to applicable laws and confidentiality safeguards, to support regulatory supervision and risk assessment.
3. Supervision and enforcement. Both regulators can cooperate on supervisory activities, examinations and investigations where appropriate, helping them address issues involving entities under their respective regulatory responsibilities.
4. Technical assistance and capacity building. The MoU also encourages knowledge sharing, technical assistance and professional development to strengthen regulatory capabilities.
These measures are intended to support a more coordinated regulatory environment for Malaysia’s capital markets and Labuan International Business and Financial Centre (Labuan IBFC).
Understanding SC and Labuan FSA
Although both are Malaysian regulatory authorities, SC and Labuan FSA have different responsibilities.
Securities Commission Malaysia (SC). SC is Malaysia’s capital market regulator. Its responsibilities include regulating capital market activities and supervising relevant market participants under the laws it administers.
Labuan Financial Services Authority (Labuan FSA). Labuan FSA is responsible for regulating and supervising financial services and business activities within the Labuan International Business and Financial Centre, under the applicable Labuan laws.
Understanding this distinction is important when researching online brokers, investment platforms and other financial service providers.
A company’s regulatory status should be assessed against the specific entity providing the service, the activities it is authorised to conduct and the jurisdiction in which it operates.
What does this mean for investors?
The MoU highlights the importance of cooperation between financial regulators. However, investors should understand that regulatory cooperation does not automatically mean every financial platform is authorised by both authorities.
Before opening an investment account, investors should consider the following checks:
Verify the legal entity: identify the exact company operating the platform.
Check the relevant regulator: confirm its registration or licence through the appropriate regulator’s official records.
Understand the permitted activities: a licence for one financial activity does not necessarily authorise all investment services.
Review investor protections: understand the applicable legal framework, complaint procedures and any relevant compensation arrangements.
Be cautious of misleading claims: a company mentioning a regulator’s name or displaying a licence number does not, by itself, establish that the company is legitimately authorised.