Think & Create

By Ted Peroulakis

Conventional buy-and-hold stock investing is not working in today’s market. Trading E-Minis is a great alternative, because you can take full advantage of the market’s volatility. 

You can easily make money in a market that is going up or down. You can, for example, make a bundle if you go “long” or buy an E-Mini contract and the market goes up. And if you go “short” or sell an E-Mini contract, you can just as easily make money when the market goes down. This adds an entirely new dimension of opportunity for investors.

An E-Mini is an electronically traded futures contract on the Chicago Mercantile Exchange (CME) that represents a smaller version of a standard futures contract. E-Mini contracts are available on the S&P 500, Nasdaq 100, S&P MidCap 400, and Russell 2000 indices. One example: The E-Mini S&P 500 futures contract is one-fifth the size of the standard S&P 500 futures contract.

E-Minis have a low margin requirement, which makes trading them easy and affordable. You can get started for as little as $500 per contract. And because standard stock and index options currently have high premiums due to market volatility, your leverage and profit potential is higher with E-Minis.

E-Minis allow investors with small amounts of risk capital to participate in the Dow and S&P 500 at a fraction of the cost of purchasing the actual stocks outright. You would have to pay thousands of dollars in commissions alone to buy all the stocks in the S&P 500, for example. But by buying an E-Mini S&P 500 futures contract, you can participate in all those stocks for a commission of less than $10!

Bottom line: Start trading E-Minis if you’re looking for an exciting, highly versatile, efficient, and economical way to capitalize on the daily swings in the stock market.

Trading is about probabilities, not certainties. A Trading Plan establishes a series of steps that ensure a higher probability of success.

The Plan will set certain guidelines for:
What stocks to buy
When to buy
When to sell

The Structure of Your Trading Plan
A Strong Market:
Before deciding what to buy, first establish if the market is in a positive phase. If the KL Composite Market has been negative over recent weeks (or longer), it is not a good time to enter the market. If the majority of stocks are going down or sideways, the probability of you buying a share that is going to rise in the immediate future is slim.

A Strong Sector:
Having waited until the market is in a growth phase, determine if there are any sectors showing strong growth in the past few weeks. These are the sectors that have stocks performing well and are increasing in price.

Examine stocks in these strong sectors and determine those that are on an uptrend, meaning the price of the stock has been steadily going up for at least 3 months.

These stocks will qualify as having potential for ongoing growth as they are generating positive market sentiment. If they have adequate liquidity on top of that, you could add any of these to your portfolio knowing that you could exit quickly at any point in time.

Exit Strategy:
Having selected shares to include in your portfolio you must then have an Exit Strategy in the event that these shares show signs of reversing. Simply set an Early Exit price to ensure that the stocks you buy never generate losses.

This is a simple description of a Trading Plan. It holds the basics for selecting stocks that have a good probability of increasing in price and risk management to protect your capital. These three ingredients are the key to success in stock trading.

Look at the column called Lots Done in your market report. This is the amount of stocks that were traded on the day. If you multiply this by the price of the stock, you can see how much money actually changed hands on that day. If this amount is high, then the stock is very liquid, meaning it is easy to buy and more importantly, easy to sell. The last thing you want once you’ve bought a stock is to be stuck with it because you can’t find a buyer.

For example, if a company has traded 100,000 stocks today and the closing price was RM2.42, we can estimate that RM242,000 worth of that stock changed hands today.

For example:
Innovics’ last price was RM 0.30 and Lots Done were 1000. This means that an average of RM 3,000 worth of stock changed hands today. In other words, Innovics is only trading an average of RM3,000 of shares each day.

Now, you own RM10,000 worth of Innovonics and you want to sell. If you enter your sell order on the market, you will inject 3 days worth of turnover onto the market. There will not be enough buyers for you to immediately sell the stock at your chosen exit price.

To ensure you invest in liquid shares, only trade stocks that show a daily turnover of at least ten times what you are planning to invest. If you are investing RM10,000 in a stock, look for an average daily turnover minimum of RM 100,000.

The Malaysian stock market is one of the strongest and sometimes most dynamic markets in the world.

While the market has always recovered from falls, the same cannot be said for individual companies. Even during a booming market, some companies can suffer significant losses.

Trade only on an uptrend and sell the poor performers, this will make it impossible to experience a large loss. This is the secret to outperforming the market and achieving a consistently superior return.

Undertake some research on the Bursa Malaysia or in a local investment paper. List three shares that have showed decreased performance recently and three shares that have showed increased performance recently.

Trends are the cornerstone of trading. If a share price is rising, we can make money by buying that share. If the share price is falling, we need to look for other opportunities. It does not make sense to buy a falling share. Our aim is always simple – find a share in an uptrend and take a large chunk from the middle of the trend.

Overall Market Strength
It is important to look at how the overall market is doing. This can be gauged by looking at the top 500 shares, otherwise known as All Ordinaries. If All Ordinaries go up, it is because stocks in the top 500 have risen and the market is in an uptrend.

There are over 1000 companies listed on the Bursa Malaysia that you can invest in. To examine each one individually would take a great deal of time. Instead, you trade with the trend and find the strong sectors in the market.

Strength of an Industry Sector
What is a Sector?
A sector is a group of companies involved in the same industry. For example, mining companies are grouped together in the Materials sector while banking companies are in the Finance sector. Entire sectors are generally affected by economic conditions so entire sectors tend to trend in the same directions. Trends do not have hard and fast rules, individual stocks within these sectors will perform at different levels.

Strength of Shares in a Sector
Although the general rule of novice investors is to buy on an uptrend, there are people who buy during a downtrend as a strategy. This is a process of buying more shares as the price falls, so the average cost of the share is reduced with every purchase. This kind of bargain hunting is a riskier strategy, as the stock price may never recover. The second downside is that the price may fall and then stabilize, meaning the investor may have to wait for a while before recovering losses or making a profit. In this scenario, capital that could be used for profitable trading would be lying idle.

Resistance to this type of trading is not new. One of the greatest traders of the last century, Jesse Livermore wrote, “Experience has proven to me that the real money made in speculating has been commitments in a stock showing a profit right from the start.”

By now you should understand that trading with the trend is critical to success. Also, our objective is never to buy at the bottom or sell at the top of a trend. We simply want to take a large chunk out of the middle. Let the trend be your friend.

With any investment, be it stock trading, real estate or business, it is important that you understand what the risks are and how to minimise your exposure to these risks. This process is known as ‘Risk Management’.

The Three Elements Of Risk Management

1. Spread Your Risk: Don’t Put All Your Eggs In One Basket
Spreading you risk is as simple as not putting all your eggs in the one basket. This is called diversifying your portfolio.

Spread your capital so there is never more than 20% in a single stock.
The following table demonstrates the impact of investing too heavily in a single stock. If you make a loss shown in the left column, the right column shows the profit required on the next trade to break even.

Capital Recovery Table

Don’t however take this to extremes and over-diversify by investing in too many stocks at once. You cannot expect to outperform the market if your portfolio closely matches the market. A rule of thumb is to limit your portfolio to between 5 and 10stocks.

2. Plan Your Exit: What Is An Acceptable Risk?
Amateur traders buy a stock and their focus is to hope it increases in price. If it goes down, they continue to hold in the hope the price will recover. When a professional buys a stock they recognise that success is a probability, not a certainty. At the time of entering the trade they establish an Early Exit price. If the stock falls past this point the good investor will immediately exit and never run the risk of making a large loss.

Maintaining your capital is fundamental to successful trading. If you invest in a stock and make a large loss, then it is impossible to consistently profit from the stock market. Having incurred a large loss, you must now make a large profit just to break even. The key to successful trading is keeping your losses small.

3. Stop The Loss: Don’t Drive Without A Seatbelt
The second must sell signal is a Stop Loss. Just tracks the highest price reached by the share since purchase. If the share falls by more than 10% from this price, it is time to sell. We suggest 10% – you can change this depending on your trading style. Too small a percentage and it will get you out too early. Make the percentage too large and you give back too much of your profits before exiting. Start with a 10% fall and see what you feel comfortable with.

Trading stocks should be treated as a business venture – it will require time, knowledge and money to succeed. Your Financial Plan represents your roadmap to success.

Decide Your Financial Objectives.
If you are a 60 year old looking for cash flow to fund your impending retirement, your priority would be to generate an income stream rather than large asset value growth.

If you are a 25 year old who wants to begin to invest, capital growth would be the priority, rather than income stream.

Your financial objectives will determine whether you trade liquid shares or not.

Decide Your Risk Level.
Decide on your risk level and the types of investments you can afford to make will be set. Remember, the higher the return you want to achieve, the higher the risk.

Low Risk Level
I am not very comfortable with risk and will invest in fixed interest/capital guaranteed securities (government bonds, bank term deposits).

Medium Risk Level
I can take on a moderate amount of risk (blue chip Industrial and Banking and Finance sector shares).

High Risk Level
I am comfortable with risk. I am seeking a high return and prepared to evaluate companies early in their growth phase (recently listed resource companies).

How Do You Fund Your Investments?
For most of us, we do not have immediate access to a large pool of ready savings. Using the equity you have in a property to fund your share portfolio is a common approach.

EPF savings is also an effective vehicle for providing funds for investing and the majority of Malaysians have access to these funds.

Most major banks and insurance groups offer margin loan facilities. This is where you start a portfolio with savings and then use this portfolio as security to borrow further funds to buy more shares.

In most instances, the problem is not acquiring funds to start a portfolio, it is having the knowledge to invest with confidence.

Withdrawal

1. Are there any exceptions to the prohibitions of withdrawals, since its inception on 1st September 1998?
A depositor shall not withdraw deposited securities from the Central Depository safe except in the following circumstances:
1. To facilitate share buy back
2. To facilitate conversion of debt securities
3. To facilitate company restructuring processes
4. To facilitate rectification of errors
5. When a corporate body is removed from the official list of a stock exchange
6. In any other circumstances determined by the Central Depository from time to time, after consultation with the Securities Commission

Electronic Share Application (ESA)

1. What is Electronic Share Application (ESA)?
Electronic Share Application (ESA) is a facility that allows for application of Initial Public Offering (IPO) through an Automated Teller Machine (ATM) of the participating financial institutions. This facility is provided by both the MIDF Corporate & Consultancy Services Sdn Bhd (MIDFCCS) and the Issuing Houses (IH), i.e. Malaysian Issuing House Sdn Bhd.

In a nutshell, ESA is a mode of applying for IPOs in a paperless manner.

2. Which financial institutions provide the ESA facility?
It is provided by financial institutions which have formulated the handling of IPO processes with the Issuing House. IN the context of ESA, these financial institutions are commonly known as Participating Financial Institutions (PFI), which are:
1. AmBank Berhad
2. Bank Muamalat Malaysia Berhad
3. Bumiputera-Commerce Bank Berhad
4. HSBC Bank Malaysia Berhad
5. Malayan Banking Berhad
6. OCBC Bank (Malaysia) Berhad
7. Standard Charted Bank Malaysia Berhad (selected branches)

3. What are the pre-requisites for an IPO applicant using ESA?
All you need is:
1. A banking account and a valid ATM card with the PFI
2. ii. A CDS account directly under the name of the applicant, which is opened with any of Bursa Malaysia Depository’s Authorised Depository Agent (i.e. stockbroking companies)

4. What are the conditions governing the ESA operations?
The respective PFI will set out the procedures and instructions on the usage of the ESA facility. Similarly, the ESA Terms and Conditions can be found in the prospectus issued by the IPO Offeror.

5. How do I use the ESA facility?
Each PFI may have different procedures in using the ESA facility through its ATM. Therefore, you are advised to check with the relevant PFI for detailed procedures in using ESA facility for an IPO application.

6. How does the ESA facility function during an IPO?
In brief, the IPO applicant will apply for a specific IPO by entering the appropriate details via the PFI’s ATM. Once the details been entered successfully, the applicant’s banking account will be debited for the appropriate amount accordingly. The PFI will then collate all the ESA applications of its account holders and forward them to the relevant Issuing House for processing and balloting.

7. What will happen in the event of a successful IPO application via ESA?
Upon completion of the balloting process, the CDS account of the successful applicant will be credited with the appropriate amount of shares allotted. The applicant will also receive a Notice of Allotment from the IH confirming the quantity of shares to be credited into his CDS account.

8. What will happen in the event of an unsuccessful IPO application via ESA?
Upon completion of the balloting process, the IH will issue an instruction to the relevant PFI on all its account holders’ unsuccessful applications. The PFI upon receiving this instruction from the IH will credit the appropriate amount back into the banking account of the unsuccessful applicant.

Note: The above FAQ on ESA facility is only intended to provide IPO applicants with a brief overview on the ESA facility. The procedures and guidelines governing the operations of ESA facility may vary from one PFI to another. If in doubt, applicants are encouraged to seek necessary clarification on the usage of the ESA facility directly from the respective PFI or Issuing House.

Transmission of Title

1. Who is authorised to liaise with Bursa Malaysia Depository with regards to the CDS account(s) of a deceased depositor?
Bursa Malaysia Depository can only liaise with the following personal representatives in terms of balance enquiry, closing of accounts, and transfer of securities:
1. Beneficiary named in the Distribution Order
2. Executor/Administrator appointed pursuant to Grant of Representation

2. Can the CDS account of a deceased depositor be suspended if wanted to?
Yes, the next of kin of the deceased depositor may suspend the CDS account by carrying out the following procedures:
1. Notifying the Bursa Malaysia Depository in writing, of the death of the depositor
2. Submitting the following documents to Bursa Malaysia Depository:
1. A duly executed Suspension/Release of Suspension of Securities Request form
2. A certified true copy of the deceased’s death certificate
3. A certified true copy of the next of kin’s NRIC
4. A certified true copy of marriage certificate/birth certificate of the next of kin to prove the relationship with the deceased
The form must be executed before a Notary Public/Advocate & Solicitor/any of the CDS officers of the ADA in Malaysia. The above mentioned documents must also be certified true by the same witness who witnesses the execution of the said form.

3. What is the procedure for transferring securities in the case of a deceased depositor?
Procedures are as follows:
1. Upon the extraction of the Grant of Representation (GOP), Letter of Administration (LA) or the Distribution Order, transfer of securities from the deceased depositor’s account may be performed by the executor/administrator appointed pursuant to the GOP or the beneficiary named in the Distribution Order, who must be personally present before an officer of Bursa Malaysia Depository to execute the relevant transfer form.

Please note that the GOP/LA obtained from other countries have to be duly resealed in the High Court of Malaysia.
2. Submit the following documents to Bursa Malaysia Depository for verification:
1. Certified true copy of the death certificate
2. Original or certified true copies of the GOP/LA/Distribution Order
3. Original or certified true copies of NRIC of the executor/administrator or beneficiary named in the Distribution Order
3. Pay the RM10transfer fee and RM50 processing fee

4. What if the executor/administrator/beneficiary cannot be present at Bursa Malaysia Depository?
In the event that the executor / administrator / beneficiary is unable to be present at Bursa Malaysia Depository, they may write to Bursa Malaysia Depository for a waiver of their presence at Bursa Malaysia Depository and state the name of the ADA where they wish to execute the relevant form. Documents as per Q3 must also be submitted together with the said letter.

5. What if the executor/administrator/beneficiary resides outside of Malaysia?
In the event that the executor / administrator / beneficiary reside outside of Malaysia, they may write to Bursa Malaysia Depository for a waiver of their presence at Bursa Malaysia Depository. Documents as per Q3 must also be submitted together with the said letter. Bursa Malaysia Depository will then send them the relevant form for their execution before a Notary Public.

Delisted Securities

For Depositors

1. What happens to the delisted securities in my CDS account?
Delisted securities in your CDS account will continue to be deposited with Bursa Malaysia Depository Sdn Bhd.

2. Can I keep delisted securities in my CDS account?
Yes, you can.

3. What are the advantages of keeping delisted securities in my CDS account?
Your securities are kept securely by Bursa Malaysia Depository thus avoiding the need for handling physical scrip and the possibility of misplacing them. Apart from that, you will also continue to enjoy all the CDS facilities extended by Bursa Malaysia Depository to its account holders.

4. Will I incur any fees if I maintain delisted securities in my CDS account?
Presently, you are not subject to any fees for maintaining delisted securities in your CDS account.

5. Am I allowed to trade the delisted securities on the stock exchange?
No, you are not allowed to trade securities which have been delisted from the Stock Exchange.

6. Will the delisted securities in my CDS account still be reflected in the CDS statement of account?
Yes, it will.

7. Will I continue receiving my CDS statement of account if it contains only delisted securities?
Yes, you will continue to receive the CDS statement of account every half yearly.

8. Is the inactive account status applicable to CDS accounts holding only delisted securities?
Yes, a CDS account holding only delisted securities will be designated as inactive if there are no CDS activities for 36 consecutive months.

9. Am I allowed to transfer delisted securities?
Yes, you may transfer your delisted securities to another CDS account by submitting the duly completed Transfer of Securities Request Form (FTF010) to your Authorised Depository Agent (ADA), where your CDS account holding your delisted securities is maintained.

10. Will the transfer of delisted securities be subject to Bursa Malaysia Depository’s approved reasons for transfer?
No, the approved reasons for transfer are only applicable to listed securities. Delisted securities are not subject to this requirement.

11. Am I allowed to withdraw delisted securities from my CDS account?
Yes, you can.

12. How do I withdraw delisted securities?
To withdraw, you need to do the following:
1. Complete and submit the Securities Withdrawal Request form (FWT010)
2. Complete the Form of Transfer of Securities (Form 32A) with sufficient stamp duty affixed
3. Submit the duly completed FWT010, Form 32A and the appropriate withdrawal fee to the ADA which maintains your CDS account holding for further processing.

13. Where can I obtain the FWT010 Form and Form 32A?
You can obtain both forms from your ADA.

14. How much does it cost to withdraw delisted securities?
Currently the withdrawal fee is RM15 per 1000 securities or part thereof. In addition, there is a stamp duty charge for executing Form 32A. The stamp duty will be charged according to the prescribed rate in the Stamp Act 1949.

15. Will I be entitled to any corporate action announced by the delisted company in future?
Your entitlement as a shareholder will be decided by the Issuer.

16. What will happen to delisted securities that are pledged to the bank?
This will depend on your arrangements with the bank. Therefore, you should seek their advice on this matter.
17. What will happen to my unclaimed securities if Jabatan Akauntan Negara approves my claim after the delisting date?
Bursa Malaysia Depository will follow the relevant directive from the regulators on this matter.

For Issuers

1. Can we request for the Record of Depositors (ROD)?
Yes, you can. Bursa Malaysia Depository will continue producing the ROD upon receiving a formal request from either the Issuer or Share Registrar. This is subject to the requester paying the appropriate ROD fees.

2. Will we incur any fees if we maintain our company’s securities in the CDS?
The current practice will continue to remain.

Account Opening

1. What is a Central Depository System?
The CDS acts as a means of representing ownership and movement of securities. CDS account holders enjoy the conveniences if obtaining electronic securities transfer and trade settlement.

2. Who may open a CDS account?
The CDS account may be opened by:
1. An individual who has reached the age of eighteen (18) years as of the application date.
2. A corporation within the context of Section 4 of the Companies Act 1965.
3. Any corporate body that is incorporated within Malaysia and is by notice, published in the Gazette, declared as a public authority or an instrument or agency of the Government of Malaysia or of any Malaysian State.
4. A society under any written law relating to co-operative societies.
5. A trustee or trust corporation duly constituted under any written law.
6. Any society registered under the Societies Act 1966.
7. Statutory bodies incorporated under an Act of Parliament.

In general, a CDS account can only be opened if the persons are opening it either as a beneficial owner or as an Authorised Nominee.

3. Why do I need to open a CDS account?
You need to open a CDs account to buy and/or sell shares, and to carry out other CDS transactions on all equity and non equity counters (i.e. bonds, loan sticks, warrants, etc.) which have been prescribed into the CDS.

4. How do I open a CDS account?
You can open a CDS account with any Authorised Depository Agents (ADAs). All stockbroking companies in Malaysia are currently ADAs.

If you are an individual investor, you may go to an ADA of your choice and:
1. Complete the Opening of Account form and two (2) Specimen Signature Cards.
2. ii. For Malaysians, submit the documents together with two (2) certified true copies of your Malaysian National Registration Identity Card (NRIC). As for foreigners, you need to pay the Account Opening fee and submit two (2) certified true copies of your passport.

If you are a corporate investor, you are required to:
1. Complete the Opening of Account form and two (2) Specimen Signature Cards.
2. ii. Submit the above documents with two (2) copies of all necessary supporting documents (e.g. Certificate of Incorporation, Board Resolution, etc) together with the Account Opening fee.

Your ADA will then open the CDS account and give you your CDS account number. Bursa Malaysia Depository Sdn Bhd will send you an account opening confirmation notice by ordinary mail.

5. When do I need to formalize an account?
If you had applied for Initial Public Offering without a CDS account prior to December 2003 and was successful in your application, Bursa Malaysia Depository Sdn Bhd would have opened a CDS account on your behalf with the broker of your choice.

Bursa Malaysia Depository would have informed you of the account and the need for you to formalise the opening of the account by submitting the relevant documents and by paying the Account Opening fee. The account cannot be utilised until all these formalities are complied with.

6. How do I open a CDS account if I cannot be present in person?
Pursuant to Rule 25.01 (1A) of the Rules of Bursa Malaysia Depository, it is mandatory for an individual to be present in person before the ADA if he intends to open or formalise a securities account. In the event that he is unable to do so, the ADA may be pursuant to Rule 5.02A (2) expressly waive the requirement to be present in person. The ADA may instead permit the investor to submit the relevant account opening form (available at all ADAs) and present his documents for verification in front of any of the following people who are also required to witness or certify the supporting documents:
1. Dealer’s representative
2. Authorised Officer of an ADA
3. Authorised Officer of an Exempt Dealer
4. Authorised Officer of a Malaysian Embassy/High Commission Consulate
5. Notary Public (in the absence of a Notary Public in applicant’s country, the authorized officers of a licensed stockbroking company or the lawyers* of that country may be allowed to verify)
6. Others as approved by Bursa Malaysia Depository

*an advocate/solicitor or barrister admitted to the recognised Bar council of the respective country.

7. Can I open more than one CDS account?
An individual investor is allowed to open only one (1) CDS account with each ADA. However, a corporate investor may open multiple accounts with the same ADA.

8. Can a permanent resident of Malaysia apply for a CDS account?
Yes, they may. You may refer to Q2 for more information.

Updating Account Particulars

1. How do I change my particulars?
You may change your personal particulars (name, investor type, registered address, etc) and also your account particulars (correspondence address, account qualifier and telephone number).

All you need to do is complete the Application for Updating of Account Particulars form, and hand it over to your ADA who will then do the rest.

2. What should I do if I wish to update my signature?
Whether you are an individual investor or a corporate body, you are required to submit an official letter expressing your intention of updating the signature to your respective ADA.

Individual investors who wish to do so must be present before the ADA, bringing along the letter officially expressing the intention of updating the signature.

The letter should contain the following:
1. The CDS account number
2. The “old” and the “new” signature
3. The “new” signature’s effective date of use

For a corporate investor, a letter duly signed by the person appointed to operate the account pursuant to Board Resolution of the company or a new Board Resolution on the update, is to be submitted.

3. Why is the notice on a successful update or particulars in a CDS account sent to both the correspondence and the registered addresses?
Bursa Malaysia Depository sends such Notice to both the registered and correspondence addresses when both the addresses differ. This is one of the security measures built in the CDS to protect any unauthorised updates and also to protect the interest of the account holder.

Closing of Account

1. How do I close my CDS account?
An account may only be closed if there are no outstanding transactions/balances remaining in that account. You can complete and submit the Application for Closing of Account form or write a letter to your ADA, stating your request to close the CDS account.

CDS Account Statements

1. When do I receive the CDS statement of account?
You will receive a monthly statement of account in respect of the preceding month which has an entry in the CDS account. However, when there are no entries but there are shares in your CDS account, Bursa Depository shall issue the statement in the month of June and December.

2. What is a statement cycle?
A statement cycle is a period which is pre-determined by the system with the purpose of generating the statement of account.

Depositors’ statement of account cycles are assigned to either the 7th, 14th or 21st of each month. ADAs’ principle and nominee accounts are assigned to the 28th of each month.

3. Why are the shares I recently bought not reflected in my latest statement of account?
If the settlement date falls after the date of your statement cycle, the transaction will be reflected in your next statement of account.

4. How do I request for a backdated copy of my statement of account?
You may request for a copy from your ADA if the date of the statement is less than one (1) year from the date of retrieval. The ADA may charge you for this service.

If the date of the statement goes back to more than one (1) year from the date of retrieval, you must request it from Bursa Depository by way if letter. Charges are applicable

5. What are the possible reasons for failure to receive the statement of account?
It may be due to the following circumstances:
1. When investors’ correspondence address is not updated with his ADA
2. When the CDS account is not yet formalized
3. When there has been no debit or credit entry into the CDS account, during that particular month

Transfers

1. How limited is my request to initiate a transfer?
Effective 1st September 1998, any transfer requests must be within the approved reasons of transfer prescribed by Bursa Malaysia Depository.

2. Can I initiate a transfer of a counter which is suspended from trading?
Yes, you can, provided it falls within the approved reasons.

3. What are the changes done to the transfer process by Bursa Malaysia Depository on 30th December 2002?
The changes are as follows:
1. Introduction of new Transfer of Securities Request form which incorporates more user-friendly features and also a declaration clause.
2. The cut-off time for depositors to lodge their transfer related documents with their respective ADA/ADM has been extended form 12.00pm to 3.00pm.
3. The previous ten (10) approved reasons have been reclassified to two (2) broad categories.
1. No Change in Beneficial Ownership
This category of approved reason for transfer caters for transfers that result in no change in the beneficial ownership of securities. Under this category of approved reasons for transfer, the name of the beneficial owner is transparent and identical at both the securities accounts of the transferor and transferee, thus no supporting document is required.
2. Change in Beneficial Ownership
This category of approved reason for transfer covers scenarios such as transfers pursuant to General Offer, transfers between family members, transfers arising from pledging of securities, transfers involving Government Authorities and transfers that require prior approval from Bursa Malaysia Depository. Except for transfers involving Government Authorities, the rest of the approved reasons in this category would require supporting documents.

4. Can I still use the old transfer form to initiate transfer of securities request?
No. It is mandatory for all transfer of securities request executed by the transferor after 30th December 2002, to include the declaration clause that is pre-printed on the new transfer request form.

5. In relation to transfers between family members’ CDS accounts, what are the scenarios or relationships allowed by Bursa Malaysia Depository?
Bursa Malaysia Depository only allows transfers between the transferor (the person who initiates the transfer) and transferee (the person who receives the transferred securities), who are immediate family members. Here are the following relationships allowed:
1. Parents
2. Children/Adopted children
3. Spouse
4. Brothers
5. Sisters
6. Grandparents
7. Grandchildren

Individual depositors are also able to transfer securities from their CDS accounts held directly in the name of the individual depositor or nominee accounts held by an Authorised Nominee (where the individual depositors are indicated as beneficial owners) to CDS accounts held directly in the name of their family members. They will be required to enclose the relevant supporting documents when initiating such transfers.

However, transferring of securities from the depositors’ Pledged Securities Accounts directly to their family members’ CDS accounts are not permitted.

However, transferring of securities from the depositors’ Pledged Securities Accounts directly to their family members’ CDS accounts are not permitted.

6. When will the transfer of securities be reflected in the CDS account?
Once the transferor submits the completed Transfer of Securities Request form to his ADA, the ADA concerned will verify all the documentation to ensure that they are in order and then enter the relevant information into the CDS. Upon successful execution of the transfer request in the CDS, the transferor’s CDS account will be debited and the transferee’s CDS account will be credited immediately.

Account Balance Inquiry

1. Can I still obtain my account balance if I do not wish to pay for an ad-hoc statement?
Yes, you can by completing a Balance Inquiry Request form available at your ADA. You will be given your latest CDS account balance without the transaction details.

2. Can my dealer’s representative have access to my account balance?
IN accordance with the Rules of Bursa Malaysia Depository, you can authorise your dealer’s representative to inquire your CDS account balance for a specific period or indefinitely, unless revoked earlier by you.

3. Can I inquire my stock balance from my stockbroking company via telephone?
In the interest of protecting the confidentiality and security of your CDS account, you are not encouraged to verify your stock balance with the ADA via telephone. Instead you are required to complete and submit a Balance Inquiry Request form to your ADA, where your signature or those of your authorised signatories will be verified.

Corporate Action

1. Can I use an authorised nominee account to apply for an IPO?
No. These authorised nominee accounts are opened by the ADA’s nominee company and is effectively owned and operated by the ADA on behalf of its client. If you are an individual IPO applicant, you must use your own individual CDS account. Margin accounts are also not allowed to be used when applying for an IPO.

2. How is my entitlement from a corporate action determined?
Whenever a corporate action is announced by the relevant issuer, Bursa Malaysia Depository will provide the Record of Depositors (ROD) as of the lodgment date of the corporate action to the Issuer or the Share Registrar of the Company. The ROD contains information on the CDS account holders and the number of shares to their credit as at the lodgment date.

Based on this information, the issuer will determine the entitlement of each of its shareholder and instruct Bursa Malaysia Depository to credit the relevant CDS accounts with the appropriate number of shares.

3. When will my CDS account be credited with securities arising from corporate actions, i.e. Rights Issue, Bonus Issue, etc?
These securities will be credited into your CDS account on the eve of the listing of the underlying securities on the Stock Exchange or on any other date as instructed by the relevant authorities.

4. Can I request for the underlying securities due to myself, arising from a corporate action exercise to be issued in the form of certificates?
No. Under Section 38 of Securities Industry (Central Depositories) Act 1991 (Amendment 1998), securities due to you as a result of any corporate exercise will be credited into your CDS account. There will be no issuance of physical certificates.

Dormant Account

1. What is a dormant account?
An account is designated as dormant when there is nil balance in the account and there has not been any debit or credit entry in the depositor’s account in the 36 months after the date of nil balance.

2. Why does Bursa Malaysia Depository designate an account as dormant?
Bursa Malaysia Depository is continuously striving to enhance the security of your CDS account. Designating relevant accounts as dormant will restrict unauthorised transactions.

3. What is the effect of my account being dormant?
Once your account is designated as dormant, you will not be able to use that account to perform any kind of CDS transactions under the Rules of Bursa Malaysia Depository. However, you may use your dormant account in your application for Initial Public Offering (IPOs) and corporate actions. You will not receive any Statement of Account until your account is reactivated.

4. Can my dormant account still be used to apply for IPOs or corporate actions?
Yes, you may use your dormant account to apply for IPOs. The same also applies for corporate actions. However, the status of your account will remain as dormant until you reactivate it.

5. Will I be notified before my CDS account is designated as dormant?
Yes, one month prior to the designation of an account to dormant status, Bursa Malaysia Depository will issue a notice to inform you.

6. When I receive the notice, what steps may I take to prevent my account from being dormant?
To ensure that your account remains active and is not designated as dormant, you may perform any CDS transaction which involves any debit or credit book entries in your account, prior to the effective date of dormancy.

7. Will I be notified again once my CDS account has been designated as dormant?
No, Bursa Malaysia Depository will only be sending a one-time notice to you one (1) month prior to the effective date of dormancy.

8. If my CDS account is dormant, can I still request to update my particulars?
Yes, you may update your particulars in your CDS account by completing the Application for updating of Account Particulars form and by submitting it to the ADA where your account is maintained.

9. How do I reactivate my dormant account?
To reactivate your account, you are required to submit a written request or the completed Application for Reactivation of CDS Account form with supporting documents (if any) to the ADA where your dormant account is maintained.

10. Must I be present before the ADA to reactivate my dormant account?
No, you don’t have to be present.

Inactive Accounts

1. What is an inactive account?
An account is said to be inactive when there are deposited securities in the account but with no debit or credit entries in the depositor’s account for at least 36 consecutive months from the date of the last entry made.

2. Why does Bursa Malaysia Depository designate an account as ‘inactive’?
Bursa Malaysia Depository is continuously striving to enhance the security of your CDS account. Designating relevant accounts as inactive will restrict unauthorised transactions.

3. What is the effect of my account being inactive?
Once your account has been designated as inactive, you may continue to perform all forms of CDS transactions which are available to the depositors except for outward transfers and trade activities.

4. What will happen to the securities held in my CDS account after it is designated as ‘inactive’?
Your securities will still remain in your CDS account after your account is designated as inactive.

5. Can I still use my inactive account to apply for IPOs or corporate actions?
Yes, you may use your inactive account to apply for IPOs. The same also applies for corporate actions. However, the status of your account will remain unchanged.

6. Will I receive any statement of account after my CDS account is deemed inactive?
Yes, Bursa Malaysia Depository will continue to send the Statement of Account on a half-yearly basis after your account is designated as inactive.

7. Will I receive entitlements such as Dividends or Bonus Issues after my CDS account has been designated as ‘inactive’?
Yes, if you are eligible to receive any entitlement, the entitled securities will be credited into your inactive account.

8. Will I be notified before my CDS account is designated as ‘inactive’?
Yes, one month prior to the designation of an account to an inactive status, Bursa Malaysia Depository will issue a notice to inform you of the same.

9. When I receive the notice, what steps may I take to prevent my account from being deemed inactive?
The designation of an account to an inactive status is to provide added security and protection to long-term investors. However, if you wish for your account to remain active, it will, if there are debit or credit entries in your account, prior to the date of inactivation stated in the notice sent to you.

10. Will I be notified again once my CDS account has been designated as ‘ inactive’?
No, Bursa Malaysia Depository will only be sending a one-time notice to you one month prior to the date of inactivation. Nevertheless, the half-yearly Statement of Account sent by Bursa Malaysia Depository will indicate the status of your account as ‘inactive’.

11. If my CDS account is deemed inactive, can I still request to update my particulars?
Yes, you may update your particulars in your CDS account by completing the Application for Updating of Account Particulars form and submitting it to your ADA where your inactive account is maintained.

12. How do I reactivate my account?
To reactivate your account, you are required to submit a written request or the completed Application for Reactivation of CDS Account form to the ADA where your inactive account is maintained.

13. Must I be present before the ADA to reactivate my account?
No, you don not need be present.

14. How long does it take to reactivate my inactive account?
Your inactive account will be reactivated within two (2) market days from the date of application.
15. Will there be a fee for reactivation?
No, there will be no fee imposed.

16. Will I be notified after my CDS account has been reactivated?
Yes, after your CDS account has been successfully reactivated, Bursa Malaysia Depository will send you a notice to inform you.

One of the benefits of investing in the stock market is that you can do it after trading hours. Bursa Malaysia is open from 9am to 12.30pm, then again from 2.30pm to 5pm but you can do research and place orders outside these hours.

So, let’s say you go to work all day and only have the evenings and weekends free. In the evenings you will review what happened to the market that day and decide how to trade the next day. If you miss a few nights during the week, you can do your analysis on the weekend.

There are two ways to place a buy or sell order:

At Market Orders
You can only make ‘at market’ orders during trading hours. If you do your research after trading hours then you would put an order through with your broker as soon as the market opens the next day. The purchase will then be made ‘At Market’ price, which may be different from the price you found during your research the night before.

At Limit Orders
The advantage of ‘At Limit’ orders is that you set the maximum price you will buy or the minimum price you will sell the share for. So, if you have done your research that evening and decided that the most you want to pay for the share is RM 1.20 then you place an ‘At Limit’ order for 100 shares at RM1.20. If your broker can get the shares for RM1.20 they will buy them for you. If not, they won’t make the trade.

This practice is quite good if you want to control the amount you are investing. The other advantage of buying ‘At Limit’ is that you can place a buy/sell order outside market hours. Therefore, your share trading business needs do not interfere with your daytime job.