A Broker in Malay - A Close Look to Its Fees and Charges

Fees and charges of a broker in Malaysia are an important consideration for investors who trade stocks or other securities. These fees can vary depending on the broker you choose, the type of security you're trading, and the value of your transaction. Let's take a look at the typical fees and charges that you can expect when trading securities in Malaysia.

Brokerage Commission

Definition

Brokerage commission is a fee charged by brokers for executing trades on behalf of investors. The commission is essentially the compensation that brokers receive for their services, which include order execution, market analysis, research, and advisory services.

Percentage of total value of transaction

Brokerage commissions are typically calculated as a percentage of the total value of the transaction. For example, if an investor buys RM 10,000 worth of shares and the commission rate is 0.5%, the brokerage commission would be RM 50. The commission is usually charged to both the buyer and the seller of the security.

Range of commission based on broker and type of security

Brokerage commission rates vary based on the broker and type of security traded. In Malaysia, rates range from 0.1% to 1.5%. Stocks usually have higher rates than bonds due to risk. Investors should also consider quality of service and additional fees. Reviewing the broker's fee schedule is important to evaluate overall value.

Clearing Fee

Definition

The clearing fee is a charge by a clearinghouse for settling trades between buyers and sellers. The clearinghouse acts as an intermediary between the buyer and seller, ensuring that the transaction is completed and the funds are transferred appropriately.

Amount charged by Malaysian clearing house

Bursa Malaysia, the Malaysian clearing house, charges a fee for clearing trades. The fee is based on the value of the transaction and is currently set at 0.03% of the total value, with a maximum fee of RM 1,000.

Percentage of total value of transaction

The clearing fee is calculated as a percentage of the total value of the transaction, with a cap of RM 1,000. The fee is charged to both the buyer and seller and is separate from the brokerage commission. It's a necessary cost of trading securities and should be factored into the overall cost of trading.

Stamp Duty

Definition

Stamp duty is a tax levied by the Malaysian government on legal documents, including securities transactions. It is payable by the buyer of the security.

Tax levied by Malaysian government on securities transactions

In Malaysia, stamp duty is levied on securities transactions and is payable by the buyer. The current rate of stamp duty on securities transactions is 0.1% of the total value of the transaction.

Percentage of total value of transaction

The stamp duty is calculated as a percentage of the total value of the transaction, with a rate of 0.1%. For example, if an investor buys RM 10,000 worth of shares, the stamp duty would be RM 10. This fee is also separate from the brokerage commission charged by the broker and the clearing fee charged by the clearinghouse. It's important to note that stamp duty is a legal requirement and failure to pay it can result in penalties and legal consequences.

Securities Borrowing and Lending Fees

Definition

Securities borrowing and lending fees are charges associated with the practice of borrowing and lending securities. This is a common practice among institutional investors and allows them to generate additional income from their holdings.

Fees charged by Malaysian brokers

In Malaysia, securities borrowing and lending fees are charged by brokers who facilitate the borrowing and lending of securities. The fees charged can vary depending on the type of security being borrowed or lent and the length of the lending period.

Percentage of total value of transaction

The fees charged for securities borrowing and lending are typically calculated as a percentage of the total value of the transaction. The percentage charged can vary depending on the broker and the type of security being borrowed or lent. It's important for investors to understand the fees associated with securities borrowing and lending before engaging in this practice, as they can significantly impact the overall returns generated from their investments.

Other Fees

Additional fees charged by some brokers

In addition to the fees discussed above, some brokers may charge additional fees for various services related to investing.

Examples of other fees

Examples of other fees that may be charged by some brokers include account maintenance fees, inactivity fees, and transaction fees for certain types of securities. Account maintenance fees may be charged to cover the cost of maintaining an account, while inactivity fees may be charged if an account remains inactive for a certain period of time. Transaction fees for certain types of securities, such as foreign stocks or options, may also be charged by some brokers.

It's important for investors to review the fee schedule provided by their broker carefully and understand all the fees associated with their account. Some fees may be avoidable through careful account management or by choosing a different broker with lower fees.

It is important to note that these fees and charges can vary from year to year. Therefore, it is always advisable to check with your broker or the relevant authorities to get the most up-to-date information. Here's a chart that shows the fees and charges for trading securities in Malaysia from 2019 to 2022.

As you can see, the fees and charges for trading securities in Malaysia have remained relatively stable over the past few years. However, it is always a good idea to check with your broker or the relevant authorities to ensure that you have the most up-to-date information.

For Example - JustForex Charges and Fees

JustForex is an online forex and CFD broker that offers trading services to clients worldwide.Let's say you want to buy 10,000 units of EUR/USD on JustForex.Here's a breakdown of the fees you might incur:

Brokerage Commission:JustForex charges a commission of$5 per lot for its ECN Zero account type.In this example,assuming a standard lot size of 100,000 units,you would be trading 0.1 lots.Therefore,your commission would be$0.50.

Clearing Fee:JustForex does not charge any clearing fee.

Stamp Duty:JustForex does not charge any stamp duty.

Securities Borrowing and Lending Fees:JustForex does not offer securities borrowing and lending services,so there would be no fees associated with this.

Other fees:JustForex may charge various other fees,such as inactivity fees or withdrawal fees.However,these would depend on the specific account type and the client's activity.For the purposes of this example,let's assume there are no other fees.

Based on the above,your total fees would be$0.50 in this example.

Here's a chart that summarizes the fees:

Note that the above fees are just an example and may vary depending on the account type, trading instrument, and other factors. It's always a good idea to check the broker's fee schedule before placing any trades.

Trivia:

What Is the Broker Meaning in Malay?

The word "broker" in Malay language can be defined as "seseorang atau syarikat yang menguruskan urusan jual beli atas nama orang lain, biasanya untuk mendapatkan komisen." This translates to "a person or company that manages buying and selling transactions on behalf of others, usually to earn a commission."

Conclusion

Investors should be aware of common fees and charges of a broker in Malay associated with investing, including brokerage commission, clearing fees, stamp duty, securities borrowing and lending fees, and other fees charged by some brokers. It's important to regularly check for current information regarding fees and charges as they can change over time, and different brokers may have varying fee structures. By understanding the fees and charges associated with investing, investors can make more informed decisions and manage their investments more effectively.