KUALA LUMPUR: The Securities Commission Malaysia (SC) has broadened the criteria and categories of sophisticated investors to allow for more individuals to qualify as sophisticated investors.
Currently the LEAP market, which seeks to give mainly small and medium enterprises (SMEs) greater fund raising access, is only accessible to sophisticated investors.
Key features of the expansion include a new category that takes into account the knowledge and experience of sophisticated investors. In addition, enhancements to current categories are made, allowing flexibilities of existing financial thresholds for high net worth individuals.
The new 'Knowledge and Experience' category will benefit individuals who do not meet financial tests but are able to demonstrate financial knowledge sophistication to participate in relevant market offerings.
This category assesses potential investors based on their education, recognised financial association membership, and practical experience in relevant sectors such as banking, capital markets or insurance.
Another key change is the inclusion of an investor's primary residence value, up to a cap of RM1 million, in assessing their qualification as a sophisticated investor.
The definition of a joint account is also expanded to incorporate accounts with a spouse or child, including total net joint annual income and investment portfolios. This expansion better depicts a family's collective financial status and investment potential.
The SC chairman Datuk Seri Dr. Awang Adek Hussin said that the growing sophistication of the Malaysian capital market has resulted in varied financing needs and investment risk appetites.
"The criteria for sophisticated investors have been broadened to include a wider range of individuals who can contribute to the market's growth and stability," he said.
"In 2023, the domestic capital market grew to RM3.8 trillion from RM3.6 trillion in the previous year. This presents significant opportunities for the market to attract a more diverse investor base regionally and encourage greater capital flow into sophisticated product and market segments," he added.
Bursa Malaysia Bhd chief executive officer Datuk Muhamad Umar Swift recently attributed its missed initial public offering (IPO) for 2023 target to lower than anticipated listings on the LEAP market.
It had set a target of 39 IPOs for 2023, but only managed to list 33 IPOs.
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