Malaysia’s securities regulator is proposing to revise its existing fee structures for the first time since it was established 32 years ago.
Mohammad Faiz Azmi, executive chairman of the Securities Commission Malaysia (SC), says the regulator aims to submit the first proposal to the finance ministry by the end of March. He expects the proposal to undergo further refinements over the coming year after discussions and negotiations with industry players. Azmi made the announcement during the launch of the SC Annual Report 2024 on March 20.
The proposed revision of the SC’s fee structure is expected to involve all capital market players, including local bourse Bursa Malaysia, asset managers, financial planners, investment banks, bond issuers, venture capital and private equity companies, trustees and issuing houses, and stockbroking companies.
Mohammad Faiz said the SC is proposing “proportionate, fair and equitable fees, structured based on size, complexity and level of activities”.
He stressed that rising costs should not have to be passed on to consumers and that the regulator would be closely monitoring industry players.
However, according to an industry player from the asset management industry, the new fee structure may hurt the smaller fund houses.
“Currently, several players are currently struggling to grow their income and profits, and some of the smaller players are struggling to be profitable. While I understand why the SC is proposing to review its fees, I think the move will likely have an impact on the fund management industry,” he tells Asia Asset Management, speaking on condition of anonymity.
While the exact percentage is still under discussion, it is believed that fees and levies will be implemented on fund management companies based on their assets under management. Mohammed Faiz says that a capped variable fee structure rather than a fixed fee will ensure that asset managers will incur higher fees when times are good, and less when times are bad.
“At the end of the day, my intention is to cover costs,” he says.
The SC recorded a loss of 2.11 million ringgit (US$477.274) in 2024, compared to a loss of 107.86 million ringgit in 2023. Its income rose 43.11% to 300.39 million ringgit in 2024, while expenditure increased by 5% to 279.69 million ringgit.
More than 75% of its expenses are staff costs, which stood at 210.1 million ringgit last year.
While staff costs make up the bulk of the SC’s expenses, Mohammad Faiz said the regulator does not overpay its employees. Quoting a study conducted by a consultant he said that employees at the SC are paid less than other companies in the financial services industry.
He also said that the attrition rate, which has ranged from 6.1% to 10.5% over the past 12 years, has jumped from 9.8% in 2023 to 12.7% in 2024.
“We need to retain talent and we need to reward our people. This is why we need to revise the fee structure,” he said.