Online Share Trading? How good is that and how cheap is that?

Good morning everyone... hmmm my friend pop up a question about online share trading to me this morning.... well welcome again to my banking hall... :)

Lets me introduce to you first what is online trading. Basically you can trade (buy or sell) your shares from anywhere with internet access. But not many people like it. What the reason?

The infrastructure is created in the way that the investors orders are actually sent to a company dealer whom will finally key in your order to the system. The investors are not able to sent his/her orders directly to Bursa. FYI Bursa is working to allow corporates trades to do it directly to Bursa which is called Direct Market Access (DMA). Because of the delay between the time investors key and and waiting for the dealer to press the last button, some investors are not comfortable, therefore still prefer to dail up and trade :)

Starting from 1/1/2008, the brokerage fees for online trading is FULLY NEGOTIABLE! Anyhow most companies still stick to the old fees of 30% discount from the normal phone trading. That comes to 0.42%( assuming if your brokerage fees is 0.60%, after 30% discount is 0.42% ) . If you have a very big trading volume.... maybe RM1mill and above (depends on the management decision), you can negotiate for lower price.

The minimum brokerage fees is also FULLY NEGOTIABLE! But again it's somehow all the banks and stockbroking firm has a common understanding to set it at RM28. Comparing to phone trading is minimum RM40. It is consider an increase in the minimum brokerage because last year it was charged at minimum rate of RM12. Therefore you have to trade at least RM6667 in order to enjoy the full benefit of 0.42% ( RM28/0.42%=RM6667 )