{"id":46060,"date":"2024-04-16T14:00:53","date_gmt":"2024-04-16T06:00:53","guid":{"rendered":"https:\/\/www.imoney.my\/articles\/?p=46060"},"modified":"2024-04-16T15:54:36","modified_gmt":"2024-04-16T07:54:36","slug":"open-stock-brokerage-account","status":"publish","type":"post","link":"https:\/\/www.imoney.my\/articles\/open-stock-brokerage-account","title":{"rendered":"Here\u2019s What You Need To Know Before You Start Trading On The Stock Market"},"content":{"rendered":"

Ready to start stock trading? You\u2019ll first need a stock brokerage account.<\/p>\n

Here\u2019s how to open an account to buy shares in the Malaysian stock market or in international stock markets.<\/p>\n

<\/span>Direct CDS vs nominee account<\/span><\/h2>\n

Before you open a stock brokerage account, you\u2019ll have to decide if you want a direct Central Depository System (CDS) account or a nominee account.<\/p>\n

What is a CDS account?<\/h4>\n

The CDS is operated by Bursa Malaysia. It\u2019s like a registry that keeps a record of all your stock holdings. When you buy shares of a public-listed company, they will be credited into your CDS account. When you sell these shares, they will be transferred out of your account.<\/p>\n

What is a nominee account?<\/h4>\n

Alternatively, you can open a nominee account. This means that your nominee (i.e. your bank or stock brokerage platform) will hold the shares that you buy, although you will still be the actual owner. Your nominee will help you handle any paperwork relating to owning these shares.<\/p>\n

Here are the differences between a CDS and nominee account at a glance:<\/p>\n\n\n\n\n\t\n\n\t\n\t\n\t\n\t\n\t\n\t\n\t
<\/th>Direct CDS<\/th>Nominee<\/th>\n<\/tr>\n<\/thead>\n
Account name<\/td>Under shareholder name<\/td>Under nominee<\/td>\n<\/tr>\n
IPO applications<\/td>Eligible<\/td>Not eligible<\/td>\n<\/tr>\n
Corporate exercises (stock splits, mergers, etc.) paperwork<\/td>Handled by shareholder<\/td>Handled by nominee (upon instruction; may charge fee)<\/td>\n<\/tr>\n
Dividends<\/td>Credited directly to shareholder\u2019s account<\/td>Credited to trust account; nominee may charge fee for processing dividend payments<\/td>\n<\/tr>\n
Annual general meetings (AGM)<\/td>Eligible to attend<\/td>Eligible, but need a Proxy Letter from nominee<\/td>\n<\/tr>\n
Annual reports<\/td>Sent directly to shareholder<\/td>Sent to nominee; have to be requested<\/td>\n<\/tr>\n
Share transfers<\/td>Handled by shareholder; can transfer to own or relative\u2019s account<\/td>Handled by nominee (may charge fee); can only transfer to own account<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n

If you\u2019re new to stock trading, it may be easier to sign up for a nominee account, as your bank or stock brokerage platform will handle the paperwork or administrative tasks for you.<\/p>\n

But if you want more control over your investments, go for a CDS account. Your stock brokerage platform will help you open a CDS account when you sign up with them. If you open a second trading account with another platform, you\u2019ll need to set up another CDS account.<\/p>\n

<\/span>Cash vs margin account<\/span><\/h2>\n

Generally, stock brokerage platforms offer two types of accounts: a cash account or a margin account.<\/p>\n

What is a margin account?<\/h4>\n

A margin account allows you to borrow cash from your broker to buy shares. The amount you can borrow may be based on the value of your cash or shares that you use as collateral (e.g. borrowing up to 2x the cash you have in your account). When you trade on a margin, you can potentially earn more gains because you\u2019ve borrowed money to buy more shares. But on the flip side, if your share prices go down, you\u2019ll also experience more losses.<\/p>\n

What is a cash account?<\/h4>\n

A cash account is simpler: it only allows you to invest using the money you have in your account. When you want to buy shares, you\u2019ll need to deposit cash into your account to complete the trade. As a beginner, it\u2019s probably best to minimise your risk by going for a cash account.<\/p>\n

<\/span>Comparison of stock brokerage fees in Malaysia<\/span><\/h2>\n

Next, it\u2019s time to choose a stock brokerage platform. You\u2019d want to consider how much fees the platform charges for executing a transaction (you\u2019ll be charged once when you buy shares, and once again when you sell them). Here\u2019s a comparison of fees for online transactions of stock brokerage platforms in Malaysia:<\/p>\n\n\n\n\n\t\n\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t
Platform<\/strong><\/th>Up to RM100k<\/strong><\/th>Above 100k<\/strong><\/th>Min fees<\/strong><\/th>\n<\/tr>\n<\/thead>\n
Affin Hwang Capital<\/a><\/td>0.08%<\/td>0.05%<\/td>RM5<\/td>\n<\/tr>\n
Apex<\/a><\/td>0.42%<\/td>0.21%<\/td>RM12<\/td>\n<\/tr>\n
AmEquities<\/a><\/td>0.40%<\/td>0.20%<\/td>RM28<\/td>\n<\/tr>\n
BIMB Securities<\/a><\/td>0.3%<\/td>0.2%<\/td>RM14<\/td>\n<\/tr>\n
CIMB Clicks Trader<\/a><\/td>0.0388%<\/td>0.0388%<\/td>RM8.88<\/td>\n<\/tr>\n
HLeBroking Value Trade<\/a><\/td>0.38%<\/td>0.18%<\/td>RM8<\/td>\n<\/tr>\n
KenTrade by Kenanga<\/a><\/td>0.42%<\/td>0.21%<\/td>RM28<\/td>\n<\/tr>\n
M+Online (M+ Silver)<\/a><\/td>0.08%<\/td>0.05%<\/td>RM8<\/td>\n<\/tr>\n
Maybank<\/a><\/td>0.42%<\/td>0.21%<\/td>Not Stated<\/td>\n<\/tr>\n
Mercury Securities<\/a><\/td>0.42%<\/td>0.21%<\/td>RM12<\/td>\n<\/tr>\n
Public Bank<\/a><\/td>0.15%<\/td>0.15%<\/td>Not Stated<\/td>\n<\/tr>\n
Rakuten Trade<\/a><\/td><700: 1%
\n700-10k: RM 9
\n310k-100k: 0.10%<\/td>		RM100<\/td>1%<\/td>\n<\/tr>\n
RHB Trade Smart<\/a><\/td>0.42%<\/td>0.21%<\/td>RM28<\/td>\n<\/tr>\n
SJ Securities<\/a><\/td>0.42%<\/td>0.35%<\/td>RM12<\/td>\n<\/tr>\n
TA Online<\/a><\/td>0.35%<\/td>0.18%<\/td>RM12<\/td>\n<\/tr>\n
UOB KayHian<\/a><\/td>0.3%<\/td>0.2%<\/td>RM8<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n

Besides these fees, you\u2019ll also have to pay a 0.03% clearing fee (up to maximum of RM1,000 per contract) and a RM1 stamp duty for every RM1,000 in transaction value (up to a maximum of RM200 per contract).<\/p>\n

Based on our comparison, Affin Hwang Capital seems to offer the lowest fees, starting at 0.08% with a minimum transaction fee of RM5. While the price differences can seem minimal \u2013 it\u2019s just a few ringgit, after all \u2013 if you\u2019re making one or two transactions per month for an entire year, the savings can add up.<\/p>\n

To open an account with one of these brokers, just visit their website and register online. They will typically ask you for the following:<\/p>\n