The evolving digital landscape presents growing opportunities for capital market entities to expand their services. The Securities Commission Malaysia (SC) observes a rising trend where more entities within the capital market are utilising technology in their business operations. While supportive of this trend, the SC acknowledges the accompanying risks posed by these technological advancements.
With more entities adopting new innovative technologies like artificial intelligence (AI), machine learning (ML), and distributed ledger technology (DLT), numerous technological risks arise from the use of information technology (IT), systems, and the internet, including cyber risks. These dangers stem from IT system failures or breaches, potentially resulting in financial losses, service disruptions, or damage to the reputation of a capital market entity, significantly impacting the market’s integrity.
To bolster risk management concerning these innovations, the SC issued the Guidelines on Technology Risk Management in August 2023 and expected to come into force by the third quarter of 2024. The Guidelines aim to further strengthen the ability of capital market entities to detect and mitigate risks associated with increased technology adoption, covering a comprehensive regulatory framework for the management of technology risk, data handling, and principles guiding the adoption of AI and ML.