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If you have been following Trade Share in Bursa Malaysia, you will noticed that I wrote about the lowest brokerage rate offered or cash upfront purchases.

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The price war has started on who offer the lowest brokerage rate in Malaysia or is it? This report is dated 10 August 2008.

Hong Leong Bank started by offering brokerage from RM12 in early January 2008. This month, March 2008, Jupiter Securities offered RM8.00 or 0.1% brokerage rate ! You will have to be carefull about all those advertisement as all of them has the symbol ‘*’ with reference to ‘Terms and Conditions Apply’.

After checking with my sources, I can safely say that in order for you to enjoy the so call LOW brokerage rate, the trade done have to be in such combinations:

1. It has to be a DAY TRADE transactions, and
2. It has to be inputed via their ECOS (ie. Internet system), and
3. It has to be a CASH UPFRONT situations.

All three conditions MUST exist in order for you to be given the low brokerage rate or amount.

What is Day Trade?

Day Trade refer to the Purchase and Sale of the same share counter of the same quantity within the same trading day.

Example:
You buy 10,000 shares of Maybank on 18 March 2008 in the morning trading session and you sold 5,000 shares of Maybank in the afternoon session. Therefore Purchase of 5,000 shares of Maybank were done as Day Trade transactions while 5,000 shares of Maybank were done as normal transactions.

Although Jupiter Securities advertised the low brokerage offered, most other brokers already offered 0.1% brokerage rate after January 2008. Let me show you how.

Day Trade rate which already in existance before January 2008 already offerred to investor 0.15% rate. If you combine ECOS or Internet discount of 30% (ie. 30% x 0.15%) it is equivalent to 0.1%, which is the rate advertised by Jupiter Securities. However Jupiter Securities has offered event better rate than 0.1% which is flat RM8.00 brokerage fee.

Warning:

You will only get RM8.00 brokerage fee if you have cash deposit sufficient to be entitled for the CASH UPFRONT rate on top of the DAY TRADE order via Internet.

Be aware that the RM8.00 is only applicable for the PURCHASE Contract as Cash Upfront rate can only be offered to Purchase contract and not Sale contract. Therefore in the above example where you buy 10,000 shares of Maybank, you sell 5,000 shares the same day and you input your buy and sale order via Internet; Your brokerage rate will be as follows:

1. Buy 5,000 shares will be charged normal brokerage rate.
2. Buy 5,000 shares at RM8.00 brokerage fee (ie. Day Trade, ECOS discount and Cash Upfront Discount).
3. Sell 5,000 shares at 0.1% brokerage rate (ie. Day Trade and ECOS discount).

Generally you will get lower brokerage rate now as compared to 2007 if your trade has the above mentioned combinations. You will have to be very carefull whenever you see another LOW BROKERAGE RATE advertisement as they will have unpublished ‘Terms and Conditions Apply” on them.

I hope this post will enlighten my readers.

Related Posts:

• What is the Lowest Brokerage for Internet Trading and Cash Upfront Trades?

WHAT IS THE LOWEST BROKERAGE FOR INTERNET TRADING AND CASH UPFRONT TRADES?

In this posting dated 10 August 2008, I want to let my reader know WHAT IS THE LOWEST BROKERAGE FOR INTERNET TRADING AND CASH UPFRONT TRADES that is available in the market when you trade shares in Bursa Malaysia.

Most Investment Bankers and Universal Brokers has a ‘gentleman’ agreement on the ‘Floor’ or Minimum brokerage for share trades using internet and shares trades for cash upfront. Here are the general guidelines:

(1) If a share is bought or sold using the stockbroker’s internet facility, stockbrokers will give a 30% discount on the standard brokerage rate with the minimum charge at RM28.00; (2) If a client has cash or trust in his share trading account prior to his Purchase order, the client can request for a 30% discount on the standard brokerage rate with the minimum charge also at RM28.00;

Note that Cash Upfront discount is only for Buy order. Sales order is not entitled for any discount as it is not included in the Ministry of Finance Budget announcement.

(3) If a client has cash in his share trading account and he key in his Buy order throught the internet, some stockbrokers will give you a double discount with the minimum brokerage still at RM28.00;

Example: If you have RM10,000 cash deposit in the share trading account before you Buy 10,000 shares at RM1.00 using the internet, your standard brokerage charge is RM10,000 x 0.6% = RM60. Your brokerage after the double discount is RM60 x 30% x 30% = RM29.40.Note: Not all stockbrokers will give you the double discount. The major stockbrokers only agreed on the minimum brokerage of RM28.

(4) If you have applied for ‘Day Trade’ rate for your account and if you buy via internet and/or do a cash upfront purchase, you can request for the discount with the minimum brokerage at RM28.

Note: A ‘Day Trade’ account is when you buy and sell the same share on the same trading day. Bursa guideline allow you to request for Day Trade brokerage rate of 0.15%.

Since the rate is already at 0.15%, most stockbrokers will only reduce the brokerage rate upto 0.1%.

SPECIAL BONUS!

Hong Leong Bank has offered the LOWEST brokerage rate in Malaysia. Only RM12!!! for Internet Trading.

Caveat : There is “Terms and Conditions Applied” statement in their advertisement. I don’t know what are their Terms and Conditions in order for you to get the RM12 brokerage rate as I don’t have Share Trading Account with Hong Leong Securities (their stockbroking subsidiary). My guess is that the Internet Purchase must also be Cash upfront and you would probably have to open a saving account with Hong Leong Bank in order for the stockbroker to directly debit your saving account for your purchases. My guess only. You will have to check with the bank yourself whether their rate is the THE LOWEST BROKERAGE FOR INTERNET TRADING AND CASH UPFRONT TRADES.

IMPORTANT NOTICE

I am in the process of changing the look of my site. I hope it will not cause any disruption but there will probably affect the look temporary.

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• Brokerage War! Who has the Lowest Brokerage in MALAYSIA!
• BURSA MALAYSIA Stock Trading Fees and Charges

Extra! Extra!

Latest news on brokerage rate for ECOS and Cash upfront trade!

A Pro Trade Shares scoop! This article is dated 28 August 2008.

End of December 2007, the Association of StockBroking Company of Malaysian (ASCM) wanted the Securities Commission (“SC”) of Malaysia to set a floor or minimum brokerage rate for ECOS and Cash upfront trading. Refer to my earlier posting on BURSA MALAYSIA STOCK TRADING FEES AND CHARGES.

SC was not agreable to a minimum brokerage rate. Bursa Malaysia on 31 December 2007 issued a circular on the new rules to all Brokers that the brokerage rate for ECOS and Cash Upfront trading will be fully negotiable without any minimum amount.

However majority of the big Brokers have decided to have a ‘gentlemen’ agreement that the minimum limit for ECOS is RM28 and for Cash Upfront trade is RM40.

NOTE: Fully negotiable brokerage rate is only applicable to Purchase contract only as defined by the Ministry of Finance and NOT Sales contract.

(1) ECOS Trade

If you keyin to buy via the internet, you can request to your Broker to give you a lower than the standard brokerage rate of 0.6%. You can even request for the ‘Floor’ rate which is the minimum rate.

(2) Cash Upfront

The defination for Cash Upfront is that you have cash in the account BEFORE you Buy. Again you can get your DR to request lower rate.

TIPS : As the Floor rate is based on few big Brokers ‘Gentlemen’ agreement, you can shop around for lower minimum rate with smaller Brokers (also known as ‘Boutique’ Brokers). They would probably ‘undercut’ the big Brokers in order to get the business.

The above is my Tips on HOW TO GET LOWER BROKERAGE RATE. I hope you benefit from my posting.

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