Alternative Fundraising Channels Raise Over MYR 1 Billion

Oct 2020

The Securities Commission Malaysia (SC), a statutory body regulating the capital market in the country, has reported that more than 2,500 micro, small and medium enterprises (MSMEs) have raised more than MYR 1 billion (USD 241 million) through crowdfunding. This was announced during its SCxSC annual fintech conference in early October 2020.

Presently, SC has 21 platforms registered to provide regulated crowdfunding solutions to meet the financing needs of MSMEs, following the implementation of the Equity Crowdfunding (ECF) and Peer-to-Peer Financing (P2P) regulatory framework in 2016. In April 2020, SC announced the liberalization of the ECF limit to MYR 10 million (USD 2.4 million) from the previous limit of MYR 5 million (USD 1.2 million).

As stated by SC Chairman Datuk Syed Zaid Albar, the regulator now focuses on boosting digital innovation and promoting inclusiveness. Through the establishment of digital investment managers (DIMs), ECF and P2P funding networks, digital asset exchanges (DAXes), and online brokers, SC has seen substantial increases in individual investor participation in the market. More than 80% of the investors are retail investors, of whom 60% are under the age of 35 years. Investors are reminded to only invest in authorized capital market products and services due to the growing number of online scams.

In 2019, three DAXes were approved by SC and are already going live with four digital assets authorized for trading on these platforms. Over 400,000 accounts were collectively opened across the three DAXes, with the trading volume reaching MYR 100 million (USD 24 million) in August 2020. Three more DIMs licenses were issued in 2020, with around 90,000 new accounts opened in the same year. SC has also recorded a 270% rise in new account openings, as demand for online brokerage services increased compared to 2019, while the average volume of trading tripled as of August 2020.

(Sources: Securities Commission; The Edge Markets)