How to Trade Shares or Stocks in Bursa Malaysia

In Pro Trade Shares previous article on How to Open a CDS Account, I showed a few CDS forms for the purpose of opening CDS account. In this posting, I will introduce other CDS forms for various other purpose.

Updating Form

It is common for one to change one mailing address or one registered address. According to MCD, one registered address is the address stated in one Identity Card (MyKard for Malaysian or Passport for foreigner). To cater for this, CDS has a special form for this purpose.  Here is the form image and its instruction on the back of the CDS Updating form.

CDS Updating Form (front)

CDS Updating Form (instructions)

If you are not active trading in stocks in Bursa for some period of time, MCD will classify your account as “Inactive”. When your CDS account is Inactive, you can still buy and sell shares but you are unable to request to transfer your shares out of the CDS account until you have submitted request to “Re-activate” your CDS account. This is a security measure by MCD to safeguard your stocks or shares in your CDS account. The form for activation is as below and the instruction on how to fill up the form are printed on the back.

CDS Activate Account Form

CDS Activate Form (instructions)

MCD will normally send you a reminder letter that your account has been classify as inactive. If after 5 years of inactivity, your account will be classified as “Dormat”. When your CDS account is Dormant, you will not be able to trade, ie. buy or sell, stocks or shares. You will have re-activate your CDS account if you want to start buying or selling shares again. The form to use is the same form for CDS activation as shown above.

Sometime you want to open a new CDS account with another stockbroker due to some reason, example, the new stockbroker has a branch close to you house. The opening of CDS account form is presented again below for your convenient.

Open CDS Account

Open CDS Account (instructions)

During the process of opening account, you will need to submit a sample of your signature. You will sign your sample signature on the CDS Signature Card. This CDS Signature Card will also be used if you decided to change the way you signed or if you forgot you old way you signed. If you want to change the way you sign, you have to present yourself personally at the office where you open the CDS account to sign a new CDS Signature card in the present of the stockbroker’s officer.

CDS Signature Card

You only need to sign on the front of the card. The back part of the card is for stockbroker updating purposes but I will just show you how it look like.

CDS Signature Card (back)

According to MCD, no one is allowed access to view you stocks balances in your CDS account. However, it is not always convenient for you to personally go to the stockbroker office to check for your latest stocks balances especially when the stock market is moving up and you want to sell but you can’t remember how many shares or unit of the stocks you have. MCD allow a CDS account holder to authorise your appointed Remisier or Dealer to check the balances on you behalf. Below is the form you will have to sign to authorise the Remiseir or Dealer. The authorisation allow you to authorise for a specific period of time (ie. up to when) or indefinately.

CDS Authorised Balance Enquiry Form

As with all type of accounts, one might one day decide to close the account. MCD has a form to cater of that. The instructions to fill up the form are again printed on the back of the form.

Close CDS Account

Close CDS Account (instructions)

With that I end today posting on the various forms available from MCD to manage you CDS account. I hope they are helpful for you.

In the following series of articles on HOW TO START TRADING STOCK IN BURSA MALAYSIA I will try to convey the meaning of the various terms used by the stockbroking industry in Malaysia. The articles will start from the very basic to the more complex workings of the stockbroking business. If you are a Malaysian or a resident of Malaysia you will be able to easily understand some of the terms. If you are not? I will provide legends or notes to explain the terms or maybe links for you to find out more about the terms.

If you hope to find investment advice here, you will be dissappointed. I will not be making any statement or giving any investment advice. You can try other sites. I will also not go into the very details of what is a stock or what is an exchange. You have to find out about them in Economics books available in the online or offline bookstores.

Ok….lets begin.

In Malaysia the man in the street often refer to stock as ’share’ so I will use either one in all my posting….I hope you won’t get confuse. I will use the word ‘Bursa’ to mean Bursa Malaysia which again the most people in Malaysia will use.

In order for you to start buying or selling stocks that are listed in Bursa, you will first need two to open two (2) types of accounts.

Note: Bursa was previously known as Kuala Lumpur Stock Exchange or KLSE. The company that managed the exchanged is listed under the name ‘BURSA’ with the trading code ‘1818′.

The two accounts required are:-

(a) CDS account.

CDS stands for Central Depository System which is an electronic account maintain by Malaysian Central Depository (”MCD”) or now known as Bursa Depository. However most stockbroking people still refer Bursa Depository to its acronym ‘MCD’ which I will use in my articles. The CDS account is just like your bank account. Whatever stocks you buy will be credited into your CDS account on due date. When you sell the stocks will be debited from your CDS account. There is no physical movement of stocks (also known as scripless trading).
(b) Trading account.

A CDS account alone will not allow you to buy and sell stocks. You will need to open a Trading Account with any of the registered stockbrokers with Bursa (also known as Participating Organisations or ‘POs’ in Bursa website). Bursa required you to reveal 4 basic information in your Trading Account application form. All POs’ Trading Account application form will have areas for you to fill these 4 informations:-

(i) Your annual income (just a gross estimate will suffice, you don’t need to give the exact figure),
(ii) Your networth. This is an estimate of all your assets such as car, house, Fixed deposits etc.,
(iii) Type of investor. Whether short term, medium term or short term investor (see note below),
(iv) The number of years trading in stock market, local or overseas.

Note:
Short term investor refer to people who buy and then sell their shares in short period of time such on the same day or within a few days or within a few weeks. Medium term investors are those who will hold for a few months before selling their shares and Long Term refer to investor who normally buy shares in expectation to hold them for few years in hope of receiving dividends payout and share price appreciations.

Who can open a CDS or Trading Account?

Basically anyone above 18 years old, Malaysians or non-Malaysians or a private limited company or a limited company again local or foreign.

As the MCD rules are more restrictive, all POs will follow the MCD rules when it comes to approving any application.

According to the MCD a non-bankrupt individual above 18 years old, private limited or limited company can open a CDS account. Sole proprietorial companies and partnership companies are not allowed to open a CDS account. For example; if you own a shop under ABC Enterprise, you are only allowed to open a CDS account under your personal name and not under the company’s name.

Since MCD has such restriction, you will also not be able to open a trading account under the same conditions because the Trading Account name must be the same as the CDS Account name opened with MCD. Otherwise it will be a breach of the MCD Act which has been enacted by the Parliment of Malaysia.

When you go to any PO to apply for a Trading and CDS account, you better bring the following supporting documents otherwise you will have to make a second trip.

Steps to open an Individual Account

Step 1. You can request for a CDS Opening Account Form (form FMN01) from one of the listed stockbrokers. Remember that you must be at least 18 years old to open an account.

CDS FMN010 form

Step 2. Complete the Opening of CDS Account form and sign on TWO (2) Specimen Signature Cards. Some brokers require you to sign 3 cards but the minimum is 2.

CDS Signature Card

Step 3a. For Malaysians you have to submit the form and specimen cars together with two (2) certified true copies of your Malaysian National Registration Identity Card (”NRIC”). If you know of any licensed Dealer’s Representative (”DR”), you can ask for these documents and have the DR to certify the copy of NRIC. If you don’t know any DR and you can also walk in to the PO’s customer service counters and the PO’s staff will normally ask one of their company’s DR to witness the documents.

Step 3b. If you are a foreigner, you will have to submit two (2) certified true copies of your passport instead of the Malaysian NRIC.

Step 4. Pay RM10.00 to open the CDS account. This is charged by MCD.

Malaysian or non-Malaysian that are not in Malaysia can still apply for the accounts. You can request via phone or online for the forms but the forms and the supporting documents must be certified by a Notary Public.

Example of a Notary Public are the Ambassadors of Malaysia in the respective foreign countries.

Steps to open a Company Account

Step1. Complete the CDS Opening of Account Form (form FMN01) and two (2) Specimen Signature Cards.

Step 2. Submit the above documents with two (2) copies of all the necessary supporting documents (e.g. Certificate of Incorporation, Board Resolution, etc) together with the Account Opening fee (RM10.00). The POs’ will provide a list of required documents.

Step 3. Please ensure all the supporting documents (except the specimen signature cards) are certified true copies by the company secretary or by one of the director of the company. Each director must sign on 2 copies (or 3 copies as required by the POs) of the specimen signature cards. You will also need to place the company rubber stamp on the card (just like the bank).

Note: Only company with the specific clause(s) in their Memorandum of Articles and Associations (M&A) that state to the effect that the company is allowed to buy and sell stocks are allowed to open a Trading Account. Please check for the clause(s) in the M&A. All POs will provide sample of the Board Resolutions for you to type under your company letter head.

Note: In Malaysia there two types of licensed DR; a paid or salaried DR is known a company Dealer while a commission based DR is known as a Remisier.

In my next posting I will explain the process of trading. Don’t missed out on my next posting by subscribing to my Feed.