CMSRL requirements: who needs a licence and how to get one

What is a CMSRL?

The CMSA has two types of licence. A Capital Markets Services Licence (CMSL) lets a firm carry on the business of one or more regulated activities. A CMSRL lets an individual carry on one or more regulated activities on behalf of that firm. Only a CMSL or CMSRL holder can carry on the regulated activities the licence permits.

You can only carry on regulated activities that your principal is licensed for. A CMSRL is valid in perpetuity, but you have obligations on each anniversary of your licence, including the CPE requirement and an annual licence fee of RM200, which is the same however many regulated activities you carry on.

Which regulated activities need a licence?

Schedule 2 of the CMSA lists eight regulated activities:

• Dealing in securities
• Dealing in derivatives
• Clearing for securities or derivatives
• Fund management
• Dealing in private retirement schemes
• Advising on corporate finance
• Investment advice
• Financial planning

Who does not need a CMSRL?

• Agents and employees of a firm licensed only for dealing in unit trust products or private retirement schemes do not need a CMSRL, but must register with the Federation of Investment Managers Malaysia (FIMM).
• Employees of a firm licensed for clearing for securities or derivatives do not need a CMSRL.
• Registered persons, such as licensed banks, Islamic banks and insurance companies, can carry on certain regulated activities without a CMSL. Their employees do not hold a CMSRL but must be fit and proper, pass the relevant examinations and meet the CPE requirement.

General requirements for a CMSRL

• You must be at least 21 years old.
• You must be fit and proper, and none of the grounds in subsection 65(1) of the CMSA may apply to you.
• You must give your principal all relevant information so it can carry out due diligence before supporting your application.
• Dealing in securities or derivatives: a recognised degree or professional qualification, a diploma in a relevant field such as finance, economics, accounting or commerce, or another recognised diploma plus at least two years of relevant capital market experience.
• Advising on corporate finance or investment advice: a recognised degree or professional qualification, or at least five years of relevant experience in the regulated activity.
• Fund management (portfolio management): typically a recognised degree or professional qualification with at least two years of relevant experience, or at least five years of relevant experience without one. The Licensing Handbook lists further routes.
• Financial planning: a qualification and membership from a recognised financial planning body, such as the CFP or IFP with FPAM, the RFP or Shariah RFP with MFPC, or the ChFC with MFPAA.

Which licensing exams do you need?

On top of the qualification requirements, you must pass the relevant modules of the SC Licensing Examinations (SCLE), which SIDC runs:

• Dealing in securities: Modules 6 and 7, or 6 and 18, or 7 and 17, or 17 and 18. Representatives dealing only in unlisted debt securities or OTC bonds must be certified by FMAM instead.
• Dealing in derivatives: Modules 14 and 16, or 17 and 18, or 14 and 17, or 16 and 18.
• Fund management (portfolio management): Modules 9 and 10.
• Advising on corporate finance: Modules 12 and 19, or 12, 19A and 19B.
• Investment advice: Modules 12 and 19, or 12 and 19A.
• Financial planning and fund management (asset management): no specific licensing examination.
• CFA charterholders are exempted from Module 7, 10 or 12 for the relevant activity, and from Module 14 subject to attending the SCLE Revision Course for that module.

How long are exam results valid?

Each module pass is valid for two years from the date you pass it, and your results must be valid when you apply. There are three exceptions. You do not need to resit if you passed while working for a licensed firm and have stayed in the capital markets industry. You also do not need to resit if you passed while at a licensed firm and left before being licensed, or were previously licensed and are reapplying for the same activity, provided you apply within three years of leaving the industry.

Individuals with distinguished service can apply for exemption from the relevant modules. This requires at least 20 years of work experience, at least 10 years directly involved in the relevant area in the capital market, financial services or a regulator, and a senior management position during that time.

How to apply through your principal

• Applications are made to the SC through its Electronic Application System (EASy). A new CMSRL uses Form 3.
• If you join an existing licensed firm, the application must go through your principal, which is responsible for verifying your good character, reputation and competency.
• The SC's client charter is two weeks for a new CMSRL application that is complete on submission and meets its fit and proper criteria.
• Once approved, your licence appears on the SC's public register of licensed and registered persons. The SC has not issued physical licences since 1 January 2015.
• To add a regulated activity you use Form 8, and to change principal you use Form 9.

How to keep your licence

• Remain fit and proper at all times, and carry on your regulated activity efficiently, honestly and fairly.
• Do not let an unlicensed person perform your licensed activities on your behalf.
• There must be no conviction against you for offences involving bribery, fraud, dishonesty, mismanagement of a corporation or violence, or under securities or corporation laws.
• Earn 20 CPE points a year before your licence anniversary date. Excess points cannot be carried forward.
• Your principal reports on your fit and proper standing to the SC twice a year, using Form 6A.

Meeting the CPE requirement once you are licensed

CPE courses must be approved by SIDC, the CPE Secretariat, and your attendance is uploaded to SIDC's CPE Tracker by the training provider.

Ogos Learning runs SIDC CPE-approved courses for Capital Markets Services Representative's Licence (CMSRL) holders, with attendance uploaded to SIDC's CPE Tracker. Founder and principal trainer Jin Yoong Chong, CFA, is an HRD Corp accredited trainer who has run accredited CPE courses for capital market licence holders since 2010. He has served as President of the CFA Society Malaysia and authored the PKMC Module 2, 3 and 4 textbooks with AICB.