Fund management industry well regulated

PETALING JAYA (Feb 11, 2014): Setting up a foreign-owned fund management company in Malaysia requires the company to be financially sound, with strong compliance audit and risk management capabilities, technological infrastructure to support investment operations, track record and experience in managing funds.
"Investment firms with long and stellar performance history, wide geographical network, and positive brand reputation will have stronger case as it potentially brings value to the development of the local capital market," Franklin Templeton Asset Management (Malaysia) Sdn Bhd country head Sandeep Singh told SunBiz.
For a company to apply for a Capital Markets Services Licence (CMSL) to carry out fund management, the Licensing Handbook requires the licensed director to have a minimum of 10 years' experience in the licensed regulated activity.
The Licensing Handbook also said that if one is licensed to carry on the regulated activity of dealing in securities and is a participating organisation, dealing in derivatives or fund management in relation to portfolio management, it is required to have a compliance officer.
Other examples include the minimum financial requirement for a CMSL for fund management in portfolio management, which is a minimum paid-up capital of RM2 million and minimum shareholders' funds of RM2 million to be maintained at all times.
As a foreign investment firm, Franklin Templeton was awarded a CMSL under the special scheme in 2009 by the SC and subsequently in 2010 it obtained its Islamic fund management licence. The SC's special scheme allowed foreign fund management companies to setup locally, which in turn, further strengthens the capital market and raises Malaysia's profile as an international financial centre.
Sandeep said the fund management industry is well regulated and, in certain aspects, the regulation here is more stringent than in some developed countries.
"The development of the fund management industry here is on a healthy growth path. The regulator has been proactive in revising the guidelines to ensure it is in line with the growth of the industry and market changes and enforcing it to protect investor's interest," he added.
For instance, the latest changes include the introduction of suitability assessment test and requirement for a more succinct product highlights sheet to be presented to potential investors. The new measures add another layer of investor protection and build confidence in the industry over the long run.