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.
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.
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