How to Open a Brokerage Account in Malaysia: A Step By Step Guide

Someone’s sitting in the shade today because someone planted a tree a long time ago

Warren Buffet

Perhaps, this quote from Warren Buffet has finally convinced you to start investing. At this point, you are aware that saving money alone will never get you far enough, at least, not without doing some investments on the side. You understand that wealth is a combination of effort, patience, and strategy, and you want to get a head start. Good for you! Your initiative now means financial freedom later!

What’s left is simply preparing you for your first time investing. 

Getting started on investing isn’t a complicated process, even in Malaysia. If you do enough research, you will realize it will only take a short time! Hence, we’ve got a simple guide you can refer to make the process smooth and easy. Shall we begin?

First, you need to open a CDS account

CDS stands for Central Depository System and is under Malaysia’s only stock exchange – Bursa Malaysia.

A CDS account functions much like your usual savings account but this time, they keep your share holdings in one place. It records the ownership of your shares and list all transactions whenever you buy or sell your shares. Above all, it is maintained directly by Bursa Malaysia and has absolutely no links to brokerages. 

For instance, let’s say you have a brokerage account with both Alliance Bank and Public Bank. You bought one stock with your Alliance Bank account, and another stock with your Public Bank account. Both stocks will be listed as yours underneath your CDS account (as a direct owner) and that means you are eligible to certain rights – such as voting rights and the right to attend AGMs.

To set up a CDS account, you need to be at least 18 years old. There is also a fee of RM10 upon opening a CDS account although do take note that most brokerage will help you open a CDS account simultaneously as you register for a stock trading account.

Second, do you want a Direct CDS account or Nominee CDS account?

The next thing you should consider is whether you want a Direct CDS account or a Nominee CDS account.

Direct CDSNominee CDS
Account holder’s nameShareholder (You – Mr./Ms.)Broker’s name (eg. CIMB Investment Nominees for Mr./Ms.)
Eligibility for IPO applicationYesNo
Dividend paymentCredited directly into registered bank accountCredited into the trust account (which is linked to savings/current account) with service charges 
Annual reports & dividend vouchersReceived directly from the RegistrarWill not receive directly from the Registrar
Rights to attend AGMYesYes, with broker consent letter
Shares transferTransferable to family members’ accountsTransferable to own account only

Essentially, a Direct CDS account allows to have full control of your portfolio since everything is under your name. The only “downside” is that you have to handle the paperwork yourself. A Nominee CDS, on the other hand, acts as a representative of your name therefore expect additional charges for this type of service.

Third, choose your stock broker.

When choosing a stock broker, you need to look out for the fees first.

Do not underestimate how fees can make a significant change on your investment yield. Depending on the frequency and amount of trades, it can even affect your finances. Below are the list of broker companies in Malaysia as well as their fees, compiled by The Fifth Person

Broker Companies in Malaysia

BrokerageUp to RM100KAbove RM100KMinimum fees
Rakuten Trade0.1%Flat RM100RM7
UOB Kay Hian0.1%0.1%RM8
Hong Leong0.1060% – 0.4028%0.1060% – 0.1908%RM8.48
Jupiter Securities0.2%0.2%RM10
Public Bank0.42%0.42%RM12
Alliance Bank0.15%-0.29%0.15%RM12
Mercury Securities0.42%0.21%RM12
AmInvestment Bank0.40%0.20%RM28
RHB Invest0.42%0.21%RM28
SJ Securities0.42%0.35%RM28
Affin Hwang0.60%0.60%RM28
Apex eTrade0.60%0.60%RM28
TA Enterprise0.49%0.42%RM28
Kenanga (KenTrade)0.42%0.21%RM28
[email protected]0.45%0.22%RM29.68

With brokerage fees, you need to pay them every time you buy and sell shares. Assuming that you are a frequent and enthusiastic trader and your brokerage is Affin Hwang, you’d be charged 0.60% on each invested amount you make, or RM28 (whichever is higher). And if you trade ten times in a single year? You’d be paying 6% or RM280 in total. 

Which is why you need to consider the difference in brokerage fees before you open a trading account with them.

Next, do you want a cash brokerage account or a margin brokerage account?

A cash brokerage account will require you to deposit cash and securities, in full, into this account for you to buy your trades. Therefore, you can only buy your stocks with your own cash that’s available. It’s rather straightforward.

A margin brokerage account, however, allows you to borrow money from the brokerage to buy your stocks. When you buy shares on margin, your profit will be amplified when the share price goes up. But so do the losses when the share price goes down.

The advantage is that it gives you a bit more flexibility in making time-sensitive trades.But do remember that you’ll have to pay a margin rate, which serves as interest on the short-term loan. In addition, you may need to place a higher account minimum to compensate for the risk of the broker potentially losing money.

For beginners, it is much safer to stick with a cash brokerage account first. It has less risks in comparison. 

Final Thoughts

As you can see, it’s fairly easy to make a brokerage account in Malaysia. If you’re still unsure about investments in general, you can always refer here to get a better grasp on the concept of investing!

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