Malaysia | Guidance note on provision of investment advice

On 30 December 2020, the Securities Commission Malaysia issued a Guidance Note on the Provision of Investment Advice (the Guidance Note) to provide clarity on conduct which the Securities Commission Malaysia would consider as falling within the regulated activity of providing investment advice under the Capital Markets and Services Act 2007.

Under the Capital Markets and Services Act 2007, a person is required to hold a Capital Markets Services Licence where he:

• carries on a business of advising others concerning securities or derivatives; or
• as part of a business, issues or promulgates analyses or reports concerning securities or derivatives,

unless a statutory exemption applies.

Pursuant to the Guidance Note, the Securities Commission Malaysia has indicated that the following:

• any communication involving providing recommendations or opinions which are likely to induce a person to take any action or position (e.g. buy, sell or hold) regarding a particular class, sector, or instrument in relation to securities or derivatives, is likely to be considered as “advising others concerning securities or derivatives”.
• the factors, though not intended to be exhaustive, which the Securities Commission Malaysia will take into account when determining whether a person is carrying on the business of providing investment advice include:

- pay-for-advice arrangements;
- offering a fee-based subscription to a channel or group, including on social media, which offers investment advice; or
- expectation of benefits or gratification, whether direct or indirectly, from the provision of investment advice.