Getting involved in and investing in the stock market has proven to provide numerous benefits, including the ability to increase your financial income. As of late, the importance of investing appears to have been widely discussed and practised amongst individuals in the country. Practically, if you are one of the people who are planning to start investing, there are a few things to keep in mind – the most important of which is to first open a CDS account and a trading account.
In this article, we will go over what a CDS account is, how it works, the different types of CDS accounts in Malaysia, and everything else you need to know before you start investing in the stock market.
A Central Depository System account, otherwise widely known as a CDS account, is an account that you would use to track and store all transaction records for your stock holdings. In layman's terms, a CDS account functions almost similarly to a fiat currency account, acting as a digital wallet that keeps track of everything you own in the stock market.
The Bursa Malaysia Depository manages all registered CDS accounts in Malaysia, and investors typically open a CDS account through their preferred registered brokerage. Because a CDS account serves as a record of all your stock ownership in the Bursa Malaysia market, every share you buy – even from different brokerages – will be kept in the same CDS account.
Because a CDS account works similarly to a digital wallet, any transaction and ownership of shares is stored in a single “safe box” – available for simultaneous stock transfer, buy, and sell at one end. However, each type of CDS account will have a different management method and a few other differences.
We will go over the various types of CDS accounts available in Malaysia, as well as all of the important criteria for each that you should be aware of.
When you open a direct CDS account, you will have more transparent access to your own account, as you will be the sole shareholder. Furthermore, with a direct CDS, you will be able to apply for an IPO and receive dividends directly to your registered bank account.
Keep in mind that owning a CDS account entails a significant amount of paperwork, which is typically a standard procedure for those getting involved in the stock market. As a result, with a direct account, the shareholder is responsible for all paperwork on corporate actions.
Conveniently, shares transfers to family members' accounts are permitted in a direct CDS account.
A nominee account, on the other hand, does not have you as the account holder; instead, the brokerage is named as the account holder. Furthermore, a nominee account does not allow you to apply for an IPO, dividend payments are transferred to the brokerage account rather than yours, and shares can only be transferred to your own account.
Ideally, the broker will handle all corporate action paperwork for the nominee CDS account.
If you are new to the stock market, it is recommended that you open a nominee account, as your preferred broker will assist you in going through the necessary procedures, which may be intimidating to some new investors.
|Direct CDS||Nominee CDS|
|Account Holder||Shareholder's Name||Broker's Name|
|IPO Application||Allowed||Not Allowed|
|Dividend Payment||Directly transferred into registered bank account||Transferred into brokerage account|
|Paperwork||Managed by shareholder||Managed by broker|
|Shares Transfer||Family members' account||Own account only|
As mentioned earlier in the article, the most important step to take before you begin investing is to open a CDS account and a trading account. We'll go over the differences between these two types of accounts, as well as why you need them to start investing.
A trading account, also known as a brokerage account, is an account that you must open in order to trade and invest with the broker of your choice. A CDS account, on the other hand, is one in which all of your share transactions and ownerships are recorded.
Before you can invest in the stock market, you'll need both of these accounts.
In general, there are only a few places where you can open a CDS account. One method is to register directly with the Bursa Malaysia. Simply download and install the Bursa Anywhere app, create an account and a CDS account, select your brokerage, and pay to complete the registration.
You can also open a CDS account directly with the broker agent of your choice, who will open a stock trading account, or also known as a stock brokerage account, as well as a CDS account for you when you register. In Malaysia, you can typically go to your preferred banking provider, such as Maybank, and register to open a CDS account with them.
Source : Bursa Anywhere
There are a few different methods for opening a CDS account in Malaysia, depending on where you decide to open one. We'll walk you through the steps you'll need to take if you want to register directly with Bursa Malaysia or with a local registered brokerage account online.
Let us go over the step-by-step guide to open a CDS account in Malaysia via Bursa Anywhere app.
When selecting a broker, there are a few factors to consider. The first consideration is whether you want to open a Cash Upfront or Margin/Contra account with the broker. The next step is to consider the brokerage fees, which will vary depending on the brokerage agent.
A Cash Upfront account typically requires investors to deposit all of their money up front before trading shares. A Margin/Contra account, on the other hand, enables investors to borrow money from their broker in order to trade stocks.
In Malaysia, it is customary to pay a fee of RM10 to open a CDS account. Furthermore, only individuals aged 18 and up are permitted to open a CDS account in Malaysia and trade stocks. However, if you choose to trade in the stock exchange market with a broker, keep in mind the various brokerage fees that will apply.
You will be given access to your CDS account once you have registered it, allowing you to check all of your share transactions and ownership. If you register a CDS with a local brokerage account, you may need to check the account's record with the brokerage.
Investing in the stock market entails spending money that has been exchanged for shares. As a result, it is critical that you have a thorough understanding of how the market operates. Typically, new investors will embark on this journey with the help of a registered broker of their choice.
There are numerous local brokerages in Malaysia that you can work with. As a result, it is advised for new investors to find the best stock broker that best suits their trading needs. We hope this article helps to prepare you before you begin investing in the stock market.
A CDS account works similarly to a digital wallet, any transaction and ownership of shares is stored in a single “safe box” – available for simultaneous stock transfer, buy, and sell at one end. However, each type of CDS account will have a different management method and a few other differences.
There are a few different methods for opening a CDS account in Malaysia, depending on where you decide to open one.
Individuals over 18 years of age are permitted to open a CDS account.
Filling in your IC in the Bursa Anywhere app will prompt you whether or not you have a registered CDS account.
An individual investor is allowed to open only one (1) CDS account. However, a corporate investor may open multiple accounts.
A CDS account number is a unique 9-digit number. However, if you are asked for a CDS account number, you usually have to enter a total of 15 digits which includes the 9 digits of the CDS number, 3 digits of the broker code and 3 digits of the branch code.
You can’t lose money with a CDS account. Typically, CDS account is an account of which all your shares ownership and transactions are stored. However, depending on the shares you trade, you may face both losses and gains when trading in the stock market.
Rakuten is a well-known and trustworthy broker agent in Malaysia, offering stock exchange services. You may open up a trading and a CDS account with Rakuten.
Refer below on how to open a Bursa CDS account:
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