Previously I discussed about Fundamental Analysis and Technical Analysis in stock investing and trading here. However, to start investing or trading, you need to have an investment account. Firstly, let’s understand the fees and charges such as brokerage fee and contract stamp when you buy or sell a stock.
Fees and charges in stock investing or trading
- brokerage fee
Whenever you take a trade, the stock broker will charge you a fee and it varies between each stock brokers. Usually they will charge a % out of the gross amount and put a minimum payable. For example, if the stock broker has a minimum payable of RM8, you will pay RM8 even if the % of brokerage fee comes to less than RM8. Besides that, if you are using margin account or trade a stock by calling your remisier, the brokerage fee will be higher.
- contract stamp
The contract stamp or stamp duty is charged at RM1 for every RM1000 of gross amount, rounded up. Therefore, if your gross amount is Rm3001, the contract stamp would be RM4. However, the maximum contract stamp is RM200. On the other hand, some stocks are exempted from the contract stamp. You can view the list at Bursa Malaysia.
- clearing fees of 0.03%
- service tax of 6%
Although the fees seem small, they can eat into your profits. Therefore, we would want to choose a credible stock broker that offers competitive brokerage fee.
Cash and margin/collateralized account
Next, let’s take a look at the 2 main types of accounts that are usually offered by the stock brokers in Malaysia.
- cash account
With this account, you can only buy stocks equivalent or lesser to the amount of money in your account. For example, if a stock is trading at RM1 and you only have RM100 in your account, you can only buy 1 lot of the stock (1 lot = 100 shares).
- margin or collateralized account
For this account, you can pledge either cash or stocks and the stock broker will allow you to trade more than what you have in your account. For example, if you pledge RM100 and the stock broker allows you to purchase 2x of that amount, you can purchase stocks up to RM200. However, do take note that there is usually interest charge if you use this facility. Besides that, the brokerage fee would be higher compared to cash account as well.
Next, let’s take a look at the stock brokers in Malaysia.
Affin Hwang eInvest
Affin Hwang Capital is a brand name of Affin Bank Investment Berhad which was formed in 2014 after acquiring Hwang-DBS Investment Bank. Besides offering local and foreign share trading services, they also offer Share Margin Financing (SMF). With this service, you can borrow money from them to buy stocks up to 2.5x the amount.
In addition, they also offer Discretionary Financing (DF). Usually when you purchase a stock, you make the payment on T+2. However, with DF you only pay on T+7. If you do short term trading, you can consider this to save some fees as per their illustration. But to use this service, there is a DF fee of 0.25% and interest charge of 8%. Therefore, if the stock is making losses, you would have additional fees to bear.
If the trading amount is less than RM100k, the brokerage fee would be 0.6% and 0.3% if it is more than RM100k with minimum of RM28. However, it is negotiable with your remisier. Besides that, the receptionist told me that some remisiers still offer 0.7% for amount less than Rm100k. Therefore, do negotiate to at least 0.6% or lower for the brokerage fee.
AmEquities
AmEquities is under AmInvestment Bank which is within the AmBank Group. For cash account, the brokerage fee is 0.05% with minimum of RM8. If it’s a collaterized account with offline trading, it would be 0.6% for amount less than RM100k or 0.4% for amount more than RM100k with minimum of RM40. However, with online trading, it would be 0.4% and 0.2% for amount less than RM100k and more than RM100k respectively with minimum of RM28. You may look at the brokerage fee in the table here.
Besides that, AmEquities also offers Share Margin Financing (SMF) up to 2x your collateral. The interest hovers between 5-5.8% depending on the collateral pledged. In addition, they also have SMART Margin Financing which is similar to SMF but the interest is between 5-8% and calculated on a daily rest basis. The fees and differences between SMF and SMART Margin Financing can be found here.
Alliance ONE Invest
Alliance ONE Invest is the investment brand under the umbrella of Alliance Bank Malaysia Berhad. They offers cash upfront, collateralized, margin, and Flexi 7 account which is their Discretionary Financing (DF). When I contacted the bank, the officer told me that there is no standard brokerage fee and it is negotiable with the remisier. However, based on iMoney, the brokerage fee ranges from 0.15-0.29% for amount less than RM100k and 0.15% for amount more than RM100k with minimum brokerage of RM12.
For margin account, the minimum amount of margin you can get is RM50k to maximum of RM20mil. And the interest rate ranges from BR+2.03% to BR+5.18%. You may read the Product Disclosure Sheet here. Besides that, they also offer External Margin account where you can still trade with your current broker but using Alliance Bank’s margin facility. Although most stock brokers offer margin account, you may consider this if you could not get it from your current stock broker.
BIMB Securities
BIMB Securities is a full-fledged Shariah-Compliant stockbroking company. Therefore, they offer Shariah advisory services and Shariah investing. There is a Shariah-Compliant Securities List that is released by the Shariah Advisory Council of Securities Commission Malaysia. It is released twice a year in May and November. The latest list as of the date of writing can be found here which was released on 27 November 2020.
BIMB separates their services into E-Broking and Tele-Broking. For E-Broking, you trade using their online platform and the limit is based on the fund that you put into the account. On the other hand, for Tele-Broking, you need to call in to the dealer or remisier to place your trade. However, you can trade up to 3x your collateral.
For E-Broking, the brokerage fee is 0.30% if the amount if less than RM100k and 0.20% if it is more than RM100k with minimum of RM14. On the other hand, for Tele-Broking, the brokerage fee is 0.60% for amount less than RM100k and 0.30% if it is more than RM100k with minimum fee of RM40. You can view the brokerage fee in the table here on the right hand side where there is a ‘See detail’ button.
You can also follow their FB page for daily news and market insight.
CGS-CIMB iTrade/ CIMB Clicks
Under CIMB, you can open an account with either CGS-CIMB iTrade or CIMB Clicks.
For CGS-CIMB iTrade, the brokerage fee is 0.42% regardless of trading amount with minimum brokerage of RM28. Besides that, they also offer 2 types of margin accounts:
- margin lite
With this account, you can trade up to 2.8x the value of your fund. The minimum facility limit is RM20k up to a maximum of RM200k. The interest per annum is 5.88% up to 18 calendar days from the drawdown date. After that, the interest rate will be at 9.88% pa. In addition, you will need to pay some fees when opening the account as per the table below:
You can also read more about it in the product page here.
- share margin financing
If the margin provided by margin lite is not enough, you can go for share margin financing with minimum facility of RM50k. You have to pay the same fees and charges as per the table above. However, there is a rollover fee of 0.5% which is waived for the first 12 months. You can read more about it here.
If you are using their platform and have any issue, they have prepared a video walkthrough to use their facilities.
On the other hand, to trade with CIMB Clicks, you would have to open a current account with CIMB. For CIMB Clicks, their online brokerage fee is 0.0388% with minimum of RM8.88 based on their table here. However, to enjoy the rate above, you need to have RM10k in your current account at all time.
FSMOne
FSMOne previously known as Fundsupermart is owned by iFAST Capital. They are known for offering bonds and funds for retailers. However, now they also offer stocks and ETFs with attractive brokerage fee. They charge 0.05% for brokerage fee with minimum of RM8.80. Besides that, when you open an investment account with any stock broker, you will also have to pay RM10 for a CDS account which is tied to Bursa Malaysia. However, FSMOne offers free CDS account opening permanently if you open an account with them. You have to pay the RM10 first and it will be credited back to your account which you can read about it here.
HL eBroking
HL eBroking is owned by Hong Leong Investment Bank. They offer Value Trade (cash) and Power Trade (collateralized) accounts. For Value Trade, the brokerage fee is 0.08% for any amount with minimum brokerage of RM8. On the other hand, for Power Trade, the brokerage fee is 0.38% with amount less than RM100k and 0.18% for amount more than RM100k with minimum of RM12. You may refer to the brokerage fee here. However, do take note that the brokerage fee amount and % shown in the website is inclusive of the 6% tax.
Besides that, HL eBroking also offers share margin financing. The brokerage fee is 0.38% for amount less than RM100k and 0.18% for amount more than RM100k with minimum of RM12. There is also interest fee of 3.80% but subject to management approval. You may read about it here.
JF Apex
JF Apex Securities or JFAS has a long history since 1979 under the name of Lim and Hszieh Sendirian. Since its inception until now, there were quite some changes to the company and also its name. In October 2000, they obtained the licensing rights of Halim Securities and expanded their operations.
Apex offers normal, securitised, and margin account. They charge 0.42% and 0.21% with minimum brokerage fee of RM12 for amount less than RM100k and amount more than RM100k respectively. Besides that, for securitised and margin account, the brokerage fee is 0.6% for trading amount less than RM100k and 0.3% if it is more than RM100k with minimum of RM40.
Kentrade
KenTrade by Kenanga offers online share trading and margin account. For online trading, the brokerage fee is 0.6% for amount below RM100k and 0.3% for amount above RM100k with minimum of RM28. However, the rate is negotiable with your respective dealer.
For margin financing, you can trade up to 2.5 times for cash and 1.5 times for shares. In addition, you can get interest free up to T+10 under their short term margin product.
M+ Online
M+ Online was established in 1963 under Malacca Securities Sdn Bhd. There are 3 types of accounts in M+ Online which are silver, gold, and T+7 accounts. M+ Gold and M+ T7 Contra is similar to Affin Hwang Capital’s SMF and DF respectively. You can read about them here for Gold and here for T7 Contra.
For M+ Silver account which is a cash upfront account, the brokerage fee is 0.08% for amount less than RM50k and 0.05% for amount more than RM50k with minimum fee of RM8.
On the other hand, for M+ Gold and M+ T+7 account, the brokerage fees are 0.3% for amount less than RM50k with minimum of RM10. However, if the amount is more than RM50k, M+ Gold charges 0.2% for brokerage fee while M+ T+7 charges 0.25%. You may view the brokerage fees for each of the accounts mentioned above here.
Maybank
For Maybank, they offer both cash and margin account. For cash account, the brokerage fee is 0.1% with a minimum of RM8. On the other hand, the brokerage fee is 0.42% with minimum brokerage of RM12 for margin account.
Mercury Securities
Mercury Securities was established since 1984 with the name of Seberang Securities Sdn Bhd. However, they changed their name to Mercury Securities in 1992. For their online trading, Mercury Securities offers brokerage fee of 0.6% for amount below RM100k and 0.3% for amount above RM100k with minimum of RM12. Even if you do not have an account with them, you can follow their FB page for some trading ideas. However, do take note that you should always do your own research and due diligence before purchasing and selling a stock.
Public Invest etrade
Public Invest etrade is owned by Public Investment Bank Berhad. They offer a brokerage fee of flat 0.42% regardless of amount but with a minimum brokerage fee of RM12 for their online trading. Besides that, they also offer share margin financing with a list of charges which can be found in slide 4 of this PDF.
Rakuten Trade
Rakuten offers 3 types of accounts which are cash upfront, contra, and RakuMargin account. All of the 3 accounts have the same brokerage fees as below:
Besides that, if you do contra trading, there are rebates which you can look at the simulation here. In addition, for every RM2 you paid in brokerage fee, you will earn 1 Rakuten Trade (RT) point. With the points collected, you can convert to BigRewards, BonusLink, or Boost via a 1 to 1 conversion basis.
RHB Invest/ RHB Trade Smart
For RHB, there are 2 platforms which are RHB Invest and RHB Trade Smart. There is no difference to them as they charge the same brokerage fee. The fee is 0.42% for amount less than RM100k and 0.21% for amount more than RM100k with minimum brokerage fee of RM28.
When you trade with RHB Invest, you will earn Hottie Points. On the other hand, when you trade with RHB Trade Smart, you will earn SmartPoints. However, they will migrate RHB Invest to RHB Share Trading and they will standardize all to SmartPoints. With the SmartPoints, you can convert to BIG Points or RHB credit card reward points for lifestyle products.
SJenie
SJenie is owned by SJ Securities which was formerly known as Subang Jaya Securities. They offer online trading, SJ Power Plus (SJPP) which is their collateralized account, and share margin financing. For online trading, the brokerage fee is 0.42% with a minimum of RM28. Besides that, for their margin financing, they offer conventional margin account and short term margin account up until T+11. For the short term margin account, the brokerage fee is minimum 0.60% for amount less than RM100k and 0.50% for amount above RM100k. You can read about the margin accounts here.
TA Online
TA Online is owned by TA Securities Holdings Berhad. They offer online trading and share margin financing as well. For online trading, TA Online offers brokerage fee of 0.49% regardless of amount with minimum of RM28.
UOB Kay Hian
UTRADE is owned by UOB Kay Hian which is the largest broker in Singapore and is backed by UOB Group. For their online brokerage fees, it is 0.42% for amount less than RM100k and 0.21% for amount more than RM100k with minimum of RM28. You can look at the brokerage fee here under ‘Fees & Settlements’. Besides that, for each RM1 that you paid as brokerage fee, you will get 1 reward point that you can redeem for trade rebates, trading tools, and trading services etc under their UTRADE Rewards Programme. However, do take note that the points have an expiry of 2 years.
Table of Comparison of Brokerage Fee
| Stock broker | Less than RM100k | More than RM100k | Minimum brokerage (RM) |
|---|---|---|---|
| Affin Hwang eInvest | 0.6% | 0.3% | 28 |
| AmEquities | 0.05% | 0.05% | 8 |
| Alliance ONE Invest | 0.15%-0.29% | 0.15% | 12 |
| BIMB Securities | 0.3% | 0.2% | 14 |
| CGS-CIMB iTrade | 0.42% | 0.42% | 28 |
| CIMB Clicks | 0.0388% | 0.0388% | 8.88 |
| FSMOne | 0.05% | 0.05% | 8.80 |
| HL eBroking | 0.1% | 0.1% | 8 |
| JF Apex | 0.42% | 0.21% | 12 |
| Kentrade | 0.6% | 0.3% | 28 |
| M+ Online | 0.08% | 0.05% (>RM50k) | 8 |
| Maybank | 0.1% | 0.1% | 8 |
| Mercury Securities | 0.6% | 0.3% | 12 |
| Public Invest etrade | 0.42% | 0.42% | 12 |
| Rakuten Trade | 0.1% | RM100 | 7 |
| RHB Invest | 0.42% | 0.21% | 28 |
| RHB Trade Smart | 0.42% | 0.21% | 28 |
| SJenie | 0.42% | 0.42% | 28 |
| TA Online | 0.49% | 0.49% | 28 |
| UOB Kay Hian | 0.42% | 0.21% | 28 |
How to Select A Stock Broker
Based on all the stock brokers in Malaysia, it can be hard to pick 1 that is suitable. Below are some pointers that you can assist you to choose the stock broker.
Investor or trader
The 1st question when looking out for a stock broker is to determine whether you are a investor or trader. Investor usually buys and hold the stocks for a long period of time. On the other hand, trader can buy and sell a stock even within a day.
Direct or nominee
When you open an investment account with a stock broker, you will have to open a Central Depository System (CDS) account which is tied to Bursa Malaysia. It is a registry to keep track of all your stock holdings. There are direct CDS account and nominee account. The table below from iMoney shows the differences between the 2 accounts.
If you are an investor, you would want to go for direct CDS account. There are a few important reasons for this. Firstly, you are eligible to apply for Initial Public Offering (IPO). When a company applies to be listed in the stock market exchange, there will be a period where public can apply to purchase their shares. People like to buy IPO because a lot of people believes the stock price will keep go up. However, that is not always the case as the price can keep going down.
Next, if you have a direct CDS account, you will get the annual report directly and also attend the Annual General Meeting (AGM) of the company that you have shares in. Although nominees account can also apply to attend AGM and getting the annual reports, you will have to go through additional steps.
Lastly, for CDS account holders, you will get the dividends from a company directly. On the other hand, if you have a nominee account, the dividend will go through a trust account. Some stock brokers may charge a fee for it.
Reward points or incentives
Some stock brokers give investors and traders reward points for purchasing stocks. For example, Rakuten Trade gives you Rakuten Trade (RT) points while RHB gives you SmartPoints. These can be exchanged for reward items which is an additional benefit for purchasing stocks with the stock broker.
Besides that, if you are a short term trader, you can consider Rakuten Trade as they give incentives by giving you back the brokerage fee if you do day trading. You can look at their simulation here. In addition, if you are a trader, you can also consider stock brokers which offer Discretionary Financing (DF) such as Affin Hwang. You can see the simulation provided by Affin Hwang here to see how you can save some cost even with the DF fees and interest charges. However, different stock brokers might have different charges so do check on the fine prints.
Convenience
If you have a savings or current account with a bank that has an investment bank under the group, it will be easier to transfer funds in and out of your investment account. For example, if you have a bank account with Maybank, you can open an investment account with them where you can easily transfer your money between the accounts.
Brokerage fee
Last and most important point is the brokerage fee. If you trade with a small amount, the minimum brokerage fee is the one that will want to look out for. However, if you invest with a large amount which usually exceeds the minimum brokerage fee, you will want a stock broker which charges low %. Based on the stock brokers list above, you can use it as a guide to negotiate the brokerage fee with your broker or remisier.
Conclusion
Based on the table of comparison for the stock brokers, you can sort by lowest to highest or vice versa for the brokerage fee. Although price is one of the most important factors when choosing a stock broker, there are other elements to take into consideration. The first step when choosing a stock broker is to decide whether you are an investor or a trader. This will affect the choices because some stock brokers offer special incentive for traders. There is no right or wrong as long as it works for you to earn from the stock market which is the ultimate goal for everyone who buys from the stock market. Once you have decided which path to step foot, you can read my article on Fundamental Analysis vs Technical Analysis here.
Which stock broker that you are using currently? If you have any pleasant or bad experience with any stock brokers that you would like to share, please feel free to comment in the section below.
