A couple of my blog readers asking me on how to trade or invest in Bursa Malaysia? In order not to disappoint them, I will write a series of article for a beginner to start invest or trade in Bursa Malaysia.
I will also explain other information related to it such as the process of buying or selling shares itself.
Part 1 – How to Open Trading and CDS Account for Trading in Bursa Malaysia?
Part 2 – How to Buy and Sell Shares in Bursa Malaysia?
Part 3 – How to Determine Trading Settlement in Bursa Malaysia?
Part 4 – How to Calculate Profit, Loss and Brokerage Fees in Stock Market Trading?
In Malaysia, stocks or shares are listed in Bursa Malaysia Stock Exchange (Bursa) which formally known as Kuala Lumpur Stock Exchange (KLSE).
In order for you to invest or trade shares that are listed in Bursa Malaysia, you need to open Trading Account and CDS Account. Below are the steps for you to follow.
Step 1 – Open trading account
You have to open trading accounts with stock broker or participating organization that is registered with Bursa Malaysia. You can find the list of stock broker companies at Bursa Malaysia webpage. You are recommended to visit their office to open an account so that their representative can verify your documents.
Some stock brokers allow account opening via internet but you need to get your documents certified by Notary Public.
Step 2 – Choose between Nominee or Direct Trading Account
Normally, stock broker provide two different trading account namely Nominee and Direct Trading Account.
For Nominee trading account, basically you appoint your broker to hold shares on your behalf. It means that, once you buy shares, your name will not show on the registration book of existing shareholders directly, instead it will show your Broker Name.
The advantage is, you do not need to do any paperworks such as fill up forms for bonus issue, right entitlements and others. The most important is your broker have to remember the dateline for all the paperworks, not you. But you still need to instruct them on what to do.
However, the disadvantage of nominee account are you are not eligible to apply for IPO and you may not receive the annual report or some gift vouchers easily.
Direct Trading account is exactly the opposite of Nominee Trading account.
You may choose to open nominee account with one broker and direct account with another broker.
Step 3 – Choose between Cash Upfront or Collateralised Account
Some brokers have an option for you to choose between Cash Upfront or Collateralised Account. For Cash Upfront account, total trading limit of the day is equal to the amount of cash you have in your trust account. The advantage of Cash Upfront account is lower brokerage fee.
For Collateralised Account, you are allowed to trade beyond the amount of cash that you have in trust account. Normally, broker allows at least 2 times the amount cash that you have. On top of that, if you have shares in the attached CDS account, they also can be used as collateral to increase your trading limit.
Trust account is an account where your broker keep cash that you deposited. They may pay interest on the money keep in this account.
Step 4 – Decide to invest Online or Offline
To invest or trade in Bursa Malaysia you can have either do it via Offline or Online but now, most of the brokers in Malaysia provide online trading platform.
For Offline Trading account, you will have a real people called remiser who will handle all your orders. You will have to contact your remiser through what ever means for buy or sell shares.
For Online Trading Account, all of your orders are made through internet application which nomally load through internet browser of your computer. Some stock broker also allow to do transaction via PDA phone or mobile phone.
The main advantage of Online trading Account over Offline Trading account is lower brokerage fee. For online trading account, you may call helpdesk for trading but they may impose high brokerage fee.
You can look at the list of stock broker companies that offering online trading here.
Step 5 – Open Central Depository System (CDS) account
Next, you have to open CDS account. Your chosen Stock Broker will assist you to open CDS account.
CDS account is an electronic account which maintain by Bursa Depository or formerly known as Malaysian Central Depository.
CDS account is used to keep track or your shares or stocks movement. Shares will be credited to your account when you buy and debited from your account when you sell on due date.
You need to fill and sign in CDS Opening Account Form (FMN01). At the same time you have to sign two copies of specimen cards and provide copies of your identity card (NRIC). The fee for CDS account openning is RM10.
If you have multiple trading account, you have to open separate CDS account for each trading account. Sharing CDS account is not allowed.
Update 8th April – Add “Choose between Cash Upfront & Collateralised Account”