Malaysia's online trading landscape shake-up

  • Markets
  • Friday, 19 May 2017

KUALA LUMPUR: Malaysia’s first fully-online trading platform under Kenanga Investment Bank Bhd’s joint venture (JV) with Rakuten Securities Inc is set to shake up the country’s online scene.

Apart from its disruptive brokerage fees, the mobile app called which was launched yesterday allows new investors to set up their Central Depository System (CDS) accounts online.

The platform operates on a “cash upfront” basis, whereby users must first transfer cash into the account to begin trading.

However, Rakuten Trade Sdn Bhd managing director Kaoru Arai said margin financing at highly competitive rates would be offered “as soon as possible”.

“For the first stage, it is cash upfront, and the next stage will be margin financing.

“We haven’t decided on the rate yet.

“In Japan, two-thirds of the trading volume from retail investors via the online platform come in through margin trading. This is the major product for online brokerage businesses, and we are currently preparing for that,” he told a press conference here.

The brokerage fee structure for, which is among the lowest in the country, features a flat rate of RM100 for any transaction of RM100,000 and above, while the fee for transactions between RM10,000 and RM99,999 is 0.1% or 10 basis points.

It charges a flat rate of RM8 for transactions between RM1,000 and RM9,999 and RM7 for transactions below RM1,000.

In April last year, Kenanga Investment Bank inked a subscription agreement and a JV agreement with Rakuten Securities to jointly provide online brokerage services.

Rakuten Securities, the second-largest online broker in Japan, is one of the main subsidiaries of Rakuten Inc. The Japanese version of the mobile app has over 1.5 million downloads.

The JV with Kenanga is Rakuten Securities’ first in the equities business outside Japan.

Kaoru said it aimed to capture between 20% and 30% of Malaysia’s retail market share within the next three years.

He said it also aimed for profitability within the first three years.

The online platform offers a reward programme which brings together three leading loyalty providers – AirAsia Big, BInfinite by Berjaya Group and BonusLink, whereby investors collect points via the transactions made on the trading app.

Rakuten Securities Inc president Yuji Kusunoki said over 90% of the trading volume among retail investors in Japan was via the online platform.

“It is more convenient and also costs less – this will attract people.

“In Malaysia, we expect the online market share will go up very fast in three or four years, and more young people will come in.

“I believe this technological evolution will dramatically change the structure of the Malaysian equity market very soon,” he said.

Kenanga and Rakuten invested RM15mil each to set up the JV in Malaysia, with the bulk of the investment channelled into IT development.

Earlier, Deputy Finance Minister Datuk Lee Chee Leong said 25% of Malaysia’s trading volume in 2016 was done via online platforms, up from 22% in 2012.

From left: Lee Kok Khee, executive director and head of group equity broking business of Kenanga Investment Bank Bhd (KIBB); Datuk Roslan Tik, executive director and head of KIBB's group investment banking and Islamic banking; Datuk Seri Tajuddin Atan, CEO of Bursa Malaysia Bhd; Izlan Izhab, KIBB chairman; Yuji Kusunoki, president of Rakuten Securities, Inc.; Tengku Datu Paduka Noor Zakiah Tengku Ismail, KIBB founder.

Datuk Chay Wai Leong, group MD of KIBB; Kamarudin Hashim, executive director of Securities Commission Malaysia; Datuk Lee Chee Leong, Deputy Minister of Finance; Mr Masayuki Ishiguro, 2nd Secretary to Embassy of Japan; Hidekazu Yui, executive officer and general manager of corporate division, Rakuten Securities, Inc.; and Kaoru Arai, managing director of Rakuten Trade Sdn Bhd.


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