Wednesday, 22 June 2011

Charges in Share Trading

For any buy/sell transaction, there will be some charges & fees involved. Here are the 3 charges we need to pay for trading shares.

1. Brokerage fee: max 0.7%, min 0.6%, internet trading usually got discount, the rate depends on each brokerage firm. The rate may also be lower for higher contract value and intraday trade, eg PBB internet rate 0.42% (min RM12) for contract value =<RM100k, 0.21% for contract value >RM100k and 0.15% for intraday trade.

2. Stamp duty: RM1 for every RM1,000 gross value of shares (max RM200), rounded up to the next ringgit. Eg 1000 shares at RM1.00 - gross value RM1,000, stamp duty RM1.00. If the gross value is RM1,001, the stamp duty will be RM2.00 (next ringgit).

3. Clearing fee: 0.03% of gross share value (max RM1,000), no round up.

These charges are not important for mid-long term investors, but are very important for short term/contra speculators.

Eg. someone contra 10,000 shares of Airasia, buy at RM3.15 and sold at RM3.18, looks like he gains RM300 from the gross value, but the total fees here are: brokerage fee RM265.86, clearing fee RM18.99, stamp duty RM64, Total fees: RM348.85. So he still lose RM48.85. Similarly, if contra buy at RM3.15 and sold at loss at RM3.12, it is not a RM300 loss, but a whooping RM646.15 loss! Be careful.

Please correct me if the information above is outdated. Anyone knows which stock broker has the most attractive brokerage fee?

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