Malaysia’s SC authorizes first P2P lending platforms in ASEAN area

Malaysia’s SC authorizes first P2P lending platforms in ASEAN area

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The Securities Commossion (SC) of Malaysia said on Thursday it has registered six peer-to-peer (P2P) lending platforms –  B2B FinPAL, Ethis Kapital, FundedByMe Malaysia, ManagePay Services, Modalku Ventures, and Peoplender. These are the first authorized such platforms in the countries from the Association of South East Asian Nations (ASEAN).

The six authorized crowdfunding platforms are expected to launch operations in 2017. They will help widen funding avenues for small and medium enterprises (SMEs). Also in 2017, the SC intends to introduce  a Digital Investment Services framework, which will enable licensees to offer automated discretionary portfolio management which is a more cost-effective, accessible and convenient channel for investors to manage and grow their wealth.

“SC’s digital agenda aims to achieve four key objectives, namely to enhance access to financing, increase investor participation, augment the institutional market and develop a synergistic ecosystem,” SC’s chairman, Tan Sri Dato’ Seri Ranjit Ajit Singh, said. “Market based financing including P2P and [equity crowdfunding] ECF will help enhance access to financing for entrepreneurs and SME businesses in Malaysia,” he added.

P2P lending is a type of crowdfunding based on loans. Borrowers get loans from investors, being it individual or institutional. Both borrowers and lenders benefit from better interest rates and returns on investment, respectively, compared to traditional financing methods. In addition, there are no intermediation parties as money change hands directly.

ASEAN countries include Brunei Darussalam, Myanmar/Burma, Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand, and Vietnam. Malaysia the first country in the ASEAN region to regulate P2P financing. It was also the first one to introduce a regulatory framework for the ECF market. Since 2015, when regulation was introduced, until October 2016, the combined amount SMEs have raised through the six regulated ECFs in the country amounted to RM8 million (about $1.9 million).

Earlier this week, the SC released guidelines for cyber resilience, requiring regulated financial entities to establish effective governance measures to counter cyber risk and protect investors.

The SC is in charge of the securities and derivatives markets in Malaysia. It was set up in 1993 as a self-funding statutory body with investigative and enforcement powers. The commission reports directly to the Malaysian Minister of Finance. Its regulatory functions include, among others, regulation of all matters relating to securities and derivatives contracts; licensing and supervision of exchanges, clearing houses and central depositories; as well as encouraging self-regulation.

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