To start investing or trading the stock market, the first thing that you got to do is to open a stock trading account. Opening a stock trading account is actually pretty simple, and in this article, we are going to discuss some of the things that you should take note of before opening your stock trading account, and HOW to open one!

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Step 1: Decide if you are opening a Direct CDS or a Nominee CDS account

A Central Depository System (CDS) account is an account that records the ownership of your stock holdings and any of your transaction history whenever you buy or sell shares. Take it as an electronic safe box that keeps your shares.

In Malaysia, all CDS accounts are maintained and operated by the Bursa Malaysia Depository. As such, you will receive a monthly account statement if there is any transaction made in your CDS account during the preceding month.

As a side note, you need to be 18 years old and above to open an account. Also, there is an RM10 fee for CDS account opening, and your brokerage will help you to open your CDS account simultaneously when you register for your stock trading account.

There are 2 types of CDS account – Direct CDS and Nominee CDS account.

Description

Direct CDS

Nominee CDS

Account holder’s name Shareholder (You – Mr./Ms.) Broker’s name (eg. Rakuten Trade Nominees for Mr./Ms.)
Eligibility for IPO application Yes No
Dividend Payment Credited directly into registered bank account. Credited into the trust account (which is linked to savings/current account)
Paperwork on corporate actions (eg. Rights issue, takeover offer) Managed directly by the shareholder. Managed by the broker on behalf of shareholder with a service charge.
Annual reports & dividend vouchers Received directly from the Registrar. Will not receive directly from the Registrar.
Rights to attend AGM Yes Yes, with bank consent letter.
Shares transfer Transferable to family members’ accounts. Transferable to own account only.

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If you are just getting started with stock investing, my suggestion is to open a Nominee CDS account as the broker will manage all the necessary paperwork on your behalf should there is a need to do so. (But it is, well, up to you)


Step 2: Choose a Stock Broker

Choosing the right broker is important, as it is its platform that you will be using to invest in the stock market. There are 2 main things that you have to consider before opening a brokerage account, namely the brokerage fees and whether you are opening a Cash Upfront or Margin/Contra account.

i. Brokerage Fees

Brokerage fee is an important consideration for an investor, especially if you are starting with a small capital. Below is a list of stock brokers in Malaysia and its brokerage fee:

As you can see in the above picture, there is a difference in how brokers charge its fees. If I were to buy into 100 units of shares at RM1.00 per unit:

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Maybank Investment Account (0.42% or RM12, whichever is higher): Total Cost = RM100 + RM12 = RM112

Rakuten Trade (0.1% or RM7): Total Cost = RM100 + RM7 = RM107

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Also, do note that brokerage fee is charged twice: when you buy and when you sell your shareholdings. Hence, it is crucial for you to choose a stock broker with a low brokerage fee!

ii. Cash Upfront or Margin/Contra Account

Next, consider if you need a Cash Upfront or a Margin/Contra account.

Essentially, Cash Upfront is pretty straightforward: you only invest the money that you have in your account (imagine a prepaid card).

In contrast, with a Margin account, you get to buy shares with a total value higher than your available cash. In other words, you can borrow money from your broker to buy shares using your Margin account.

When you buy shares on margin, your profit will be amplified when the share price goes up. On the flipside, your losses will also be amplified when the share price goes down.

On a personal note, I do not recommend new investors to buy shares on margin, unless you really know what you are doing and you can handle the risk involved.


Open Your Stock Trading Account Online via Rakuten Trade!

Rakuten Trade is a joint venture between Malaysia’s Kenanga Investment Bank Berhad and Japan’s Rakuten Securities, Inc. Let’s dive deeper and find out more about Rakuten Trade:

#1 One of the lowest brokerage fees around

Rakuten Trade offers one of the lowest brokerage fees among the brokers in Malaysia – hence making it one of the most affordable options for new and experienced investors or traders alike.

Transaction Size

Brokerage Fees

< RM1,000 RM7 flat fee
RM1,000 – RM9,999 RM8 flat fee
RM10,000 – RM99,999 0.1%
> RM100,000 RM100 flat fee

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#2 Hassle-Free Account Opening

Rakuten Trade is also the first in Malaysia that offers online account opening. It took me about 15 minutes to register for a Rakuten Trade share trading account. The best part is that your application will be processed extremely quick and you can start investing after your account has been activated.

p.s. Rakuten Trade stock trading accounts are Nominee CDS. Meaning, you do not have to deal with all the related paperwork in your investing or trading journey.


Step-by-Step Guide to Open a Rakuten Trade Stock Trading Account (will focus purely on Cash Upfront account here)

Step 1: Select ‘Cash Upfront’ as your Account Type.

Step 2: Key in your Name, Nationality & IC

Step 3: Upload the front & back snapshot of your IC.

Step 4: Key in your Contact, Email, Username and Security Question.

Step 5: You have to set a 6-digit trading pin to execute any transaction for buying or selling shares. This pin is VERY important as you need to key in this pin for all your transaction on Rakuten Trade!

Step 6: Key-in your personal particulars in the next few sections.

Step 7: Update your bank account details & upload your Bank Statement.

Step 8: Answer the few remaining questions for profiling purposes.

Step 9: Update your bank account details & upload your Bank Statement.

Step 10: Pay RM10 for your CDS account opening.

Step 11: Upon payment, you will receive an email in your inbox asking you to verify your email.

Step 12: Done! You will be notified once your Rakuten Trade account is approved. Next, you can start to fund your account and start investing or trading!


No Money Lah Verdict

To start investing or trading the stock market, choosing a reliable stock trading platform is important, and I have no problem recommending Rakuten Trade due to its ease of application and additional perks (eg. Earning RT Points that is convertible to BIG Points for every transaction.)

If you find this article useful, and would like to open your Rakuten Trade stock trading account, do consider using my referral link HERE to register for your account. For that, I will gain 500 RT points from this registration. Otherwise, you can always google for Rakuten Trade and open your account too. 🙂 


p.s. Learn HOW to invest in the stock market to generate a long-term passive income stream! More details HERE

Check out: 5 BIGGEST MISTAKES that I Made In Stock Market Investing

 


Chin Yi Xuan

At 24, Yi Xuan is an Economics graduate from University of Malaya. He is currently a full-time day trader while working part-time as a table tennis coach and an active Toastmasters club member.

As the founder of No Money Lah, Yi Xuan is passionate in writing about adulthood topics from personal happiness to money and investment.

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