Share Trading: Nominee vs Direct CDS account

Did you ever notice that when you open a share trading account with a broker, they will usually ask you whether you prefers nominee or direct CDS account? For an ordinary investor, we might not really understand what are the differences and benefits that you can enjoy for both types of CDS (Central Depository System) account.

Well, this is the very basic step every share trading investors should find out first, before approaching a share broker. Equipping yourself with the relevant basic knowledge in order to avoid starting at the wrong footstep. Agree?

This article may help you to understand the differences between these two type of account. Please refer to below comparison tables:

Account Opening Stage

How about the Trading Fees?Generally, the charges are the same for both accounts. Whereby, the normal brokerage fee is 0.42% per transaction with minimum RM12 for online transaction or minimum RM40 for offline transaction. Meanwhile, the clearing fee is 0.03% per transaction and stamp duty of RM1 per RM1,000 contract value.

How about Collateral Limit?

For those account which gave you some trading limit based on how much collateral you pledged into your trading account. Collateral such as cash and shares would give you a limit of 2-3 times of the total value pledged. This is good for those traders who want some flexibility, so that he/she still can buy shares although he/she don't has so much cash inside their trading account yet. Of course, investors need to settle the outstanding amount within T+3 trading days.

After Trading Stage

By comparing both account, share investor who owns a Direct Account can enjoy better savings on the "after trading" charges. However ,the main advantage that a Nominees Account holder can enjoy is the service of a share broker. The paperwork of corporate actions sometimes is very hard for investors to understand and make decision. And, many investors might missed out in replying those corporate actions if they were a direct account holder. If you're a nominee account holder, please make full use of your nominee charges. In summary, there is advantages and disadvantages to both accounts.

PS: All Margin/Pledge /Foreign Trading accounts are treated as Nominees CDS account.

This is a guest post contributed by Martin Heng Sin Soon, an Equity Dealer with RHB Investment Bank. You can open both nominee and direct account with him. He can be reached via email heng.sin.soon@rhbgroup.com.my

Bursa Malaysia's eStatement

Today, Bursa Malaysia introduced eStatement services to CDS account holders. It enables CDS account holders to receive statements and notices directly from Bursa Malaysia via email.

What's the benefits?

1. To receive CDS statements and notices efficiently and on a timely basis with NO extra cost
2. To receive CDS statements and notices directly to your personal email
3. Minimize risks of not receiving your CDS statements and notices
4. Less cumbersome to keep hard-copy statements compared to soft-copy

For many of us, this is definitely an environmental friendly way of communicating. Also, it effectively reduce the cost of doing business for Bursa Malaysia. Once it implemented successfully, the profits of Bursa should be better... Considering to invest in Bursa shares now?

How to register?

1. From now onward, you CDS statement of account and any notice you receive from Bursa Depository will include your "Unique Password Phrase". (This will ceased once you successfully provide your email address via Bursa Malaysia's website)
2. Then, log on to Bursa Malaysia's website and select "Request for eStatement"
3. Follow the steps and fill-in your personal details as required

As simple as that, NO document needed, NO extra cost, NO headache again. However, please be mindful that once you have provided your email address for eStatement, you will not receive any statements or notices via normal post anymore. Once successful register, you will receive an email confirming your email address within 2 business days and thereafter a computer generated confirmation notice will be mailed to your address.

I have already register my email address under eDividend initiative, do I need to register again?

YES, because there are different type of services.

I have more than one CDS account, do I need to register my email address for each of them?

NO, you just need to register one email address ONCE for all your CDS accounts.

For nominee account, how is it?

You will need to contact your nominee (etc banks or stock broking firms).

For more FAQs answer, click here.