Thursday, February 24, 2011

How to Trade Stock at Bursa Malaysia for Beginner

To trade stock at Bursa Malaysia ( previously named KLSE), the familiar question is:  
How to have a trading account and start buying shares?
Want to read some history about Bursa Malaysia? The best articles are:

Do you qualify to trade at Bursa Malaysia?
You have to be at least 18 years old. If not, wait until your 18th birthday.
Step by Step Guide:
1. Open a Central Depository System (CDS) account: you can do this by approaching an authorized depository agent such as stockbroking company and some banks.
  • provide photocopies of IC (identity card)
  • fee RM10
You will receive the account document by mail.
2. Open a trading account with stockbroker: this will be done simultaneously when you open the CDS account.
  • need to provide income statement
  • fill out trading account form
  • the stockbroker will check your credit status at CTOS (Credit Tip-off Service) and stockbrokers’ defaulters’ list – in order to qualify you and set your trading limit
What do you need to know about CDS account?
  • it allows you to buy and sell shares
  • it also allows you to trade non-equity counters such as bond and warrants
  • it is something like a bank account – you keep cash in bank accounts, you keep shares in CDS accounts.
  • you can have more than one CDS account
  • there are two type of CDS accounts: direct and pledge
  • if you have a direct account, you will receive the dividend checks and prospectus mailed to your house.
  • if you have a pledge account, the stockbroker will receive the dividend payout and prospectus on your behalf. Then the stockbroker will bank in to your account.
  • normally banking stockbrokers will require you to open a pledge account.
  • you will get CDS account statement monthly. If there is no activity, you will still get the statement on June and December.
3. Get a remisier: normally your stockbroker will appoint one to you if you don’t have any particular preference.
  • remisier has to be licensed by the Securities Commission
  • remisier helps you make the order: sell? or buy? at what price?
  • get someone you like and trustworthy as your remisier
4. Buying and Selling Shares: You can key in your order at online system provided by your stockbrokers, or call your remisier to make the order. If your buying order match a selling order, you will get a trade confirmation. The stockbroking firm will then send out contract notes to you specifying details of transaction.
5. Payment: When you buy share of company S, your CDS account will be credited with share S at 9am on T+3 (T=transaction date). The 3 days only include working days. Yourpayment had to be made on 12.30pm that day. If not, your share will be forced sold at a contra loss or contra gain.
Fees involved:
  • brokerage fees – maximum 0.7% of the value of total shares traded, normal practise is 0.6%
  • Clearing fees 0.04% of contract value subject to cap of RM500
  • stamp duty – RM1 for every RM1,000 worth of value
Free Resources about Bursa Malaysia:
~Kclau. com~

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