Wednesday, April 2, 2008

Business Portal

Business Portal

HOW TO START TRADING SHARES IN BURSA MALAYSIA?

Posted: 01 Apr 2008 10:26 PM CDT


Although Malaysian stock market is not as big as that in United States, I think there will be people interested on How to Start Trading Shares in Bursa Malaysia. I will cover from the very basic to the more complex workings of the stockbroking business in Malaysia. 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. This articles will be over a few parts.
Malaysian refer to stock as ’share’ and ‘Bursa’ to mean Bursa Malaysia. As I go along I will insert notes to explain the terms used in Share Trading in the shares of companies listed in Bursa Malaysia. You will need to open two (2) types of accounts before you can start trading.

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

The two accounts than you will need to start Trading in shares in Bursa are:-

(a) CDS Account.

CDS stands for Central Depository System which is basically account maintain by Malaysian Central Depository (”MCD”) or now known as Bursa Depository. It is like a bank’s saving account. Most stockbrokers still refer to Bursa Depository as ‘MCD’. Shares that you Buy and Sell will be Credited (or Deposited) and Debited (or Withdrawn) in your CDS account on the contract settlement due date. There is no physical movement of shares as it is known as scripless trading.

(b) Trading Account.

You can’t Buy or Sell Shares in Bursa Malaysia with just a CDS account. You will need to open a Trading Account with any one of the licensed Stockbroker and a registered member of Bursa (also known as Participating Organisations or ‘POs’ in Bursa website). There are four basic information that you must provide (other than your personal particulars) as required by Bursa before you can open a Trading Account to Trade Shares:- (i) Your gross annual income, (ii) Your gross networth, (iii) Your preferred trading method (ie. investor or trader), (iv) Your experience in share trading. There are some basic criteria before you can open a CDS and a Trading Account?

(a) You must be above 18 years old for individual (Malaysian or Non-Malaysian) and not declared a bankrupt, (b) A local or foreign registered company.

A ‘Business’ is not allowed to open a CDS Account, thus will not be able to open a Trading Account. You will need the following documents when you want to apply to open a CDS and a Share Trading Account.

(1) You need to fill up a CDS Opening Account Form (form FMN01 which you will be given at the stockbrokers counters. I posted a image of the form in my posting on HOW TO OPEN A CDS ACCOUNT AND A TRADING TRADING as GoArticles don’t allow posting of pictures.

(2) You will also have to sign TWO (2) Specimen Signature Cards. As for company, there are certain documents which the respective stockbrokers can list them for you.

(3) You have to fill up the Stockbroker’s Share Trading Account Form.

(4) You must bring along your National Registration Identity Card (”NRIC”) for Malaysian or you Passport if you are a Non-Malaysian. The Stockbroker will have their Dealer’s Representative sign on copies of the documents after they have verified them against the original.

(5) Pay RM10.00 to open the CDS account as charged by MCD.

If you lived outside Malaysia, you can call or email your request for the Stockbroker to mail you the forms. The forms and documents must be certified by a Notary Public in your home country or where you reside. Example of a Notary Public is the Ambassadors of Malaysia in the respective foreign countries. I suggest you to read more information at www.recursion.info, www.doktermuda.com, and dengarblogku blog.
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