Corporate/M&A
Revised Guidance Note on Provision of Investment Advice
Due to the growing popularity of financial influencers providing investment advice on capital market products, the Securities Commission Malaysia (“SC”) has revised its Guidance Note on Provision of Investment Advice (“Guidance Note”), and some of the key changes/clarifications to the Guidance Note are as follows:
- The SC has made clear in the Guidance Note that having a disclaimer that states that you are not providing an investment advice, in itself, does not relieve you from the requirement of holding a licence. Ultimately, the SC will take into account of the overall circumstances in making an assessment whether a person is ‘carrying on a business of advising others concerning securities or derivatives’, which will then determine whether a licence for carry on the regulated activity of providing investment advice is required.
- Generally, talking or sharing factual information about an investment product or towards educating the followers (as opposed to advising) would not likely require a licence from the SC. Sharing of genuine user experience would also not likely require a licence from SC.
- However, if the social media influencers provide recommendation or opinion which may induce their followers in taking an action (e.g. buy, sell or hold) based on the recommendation or opinion (e.g. investing in investment funds), SC is more likely to consider them as sharing investment advice, which will then require a licence.
- SC will also determine if the activity carried out by the social media influencers amounts to “carrying on business” by taking into account, amongst others, the income generated by views on social media platform, or referral rewards, or affiliate marketing.
