Cash trust schemes investing in capital market products are set to face clearer licensing requirements under a new Securities Commission Malaysia framework, according to a report by The Edge.

The Ministry of Finance said in a written parliamentary reply that the regulator is finalising the framework to clarify when such schemes require a licence.

The initial phase will cover capital market-related activities. The move forms part of efforts to strengthen regulatory oversight.

Cash trust schemes are managed by trust companies registered with the Companies Commission of Malaysia under the Trust Companies Act 1949 and governed by the Trustee Act 1949.

Concerns have arisen where these schemes undertake activities linked to capital market products, with implications for investor protection and market confidence.

Amendments to the Capital Markets and Services Act 2007, effective 1 January 2026, expanded the SC’s authority to determine which trust companies and controlled activities do not require a licence.

The ministry said the regulator has prosecuted a trust company for conducting controlled capital market activities without a licence.

It has also investigated several trust companies suspected of unlicensed activities, engaged the Association of Trust Companies Malaysia for benchmarking, and run public awareness campaigns on the features and risks of cash trust investments.

The commission will continue strengthening supervision and take follow-up action to ensure compliance and safeguard investors, the ministry added.

SC and the Companies Commission of Malaysia are also developing a joint framework to define scope, clarify roles and coordinate enforcement on cash trust-related matters.

Featured image: Edited by Fintech News Malaysia, based on image by ababilhot via Freepik