Finding the cheapest Broking firm/ house
Click the below useful link
http://www.i3investor.com/jsp/hti/brokers.jsp
Cash versus Share Collateral
Collateral is something you ready give up/surrender to a broker house in share trading. Basically means that you have to deposit certain amount of money, minimum 10k for CIMB Clicks Trader or 30k for ECM money Cash Upfront in the designated account, and they let you trade with One times the limit of the money you put in.
Say you have 10k in CIMB Clicks then you can buy a total share value of 10k. Similarly, if you have 20k then you can trade in 20k share value. Remember that, first it is in contra mode. Only until T+3 or T+4, if you insist to hold the shares longer, then you have to own the shares by 'picking up' the shares. Meaning remisier will now withdraw your money in the bank account or Trust account.
2 x cash collateral or share collateral means, they let you to buy advance 2 x the limit of the money you have or existing share you already own /PICKED UP. Again, that is the contra mode. If you buy maximum 2 x the limit on first day with cash collateral, later on reaching T+3 or T+4, you either have to top up more money to pick up entire shares, or you want to sell your half of your new shares and pick up half with your money.
For share collateral, you can buy maximum 2 x the limit on first day, I believe your remisier would advise you to sell your existing shares you own/ picked up on the first day if you plan not to top up anymore money on T+3 call.
Remember, DON'T EVER LET REMISIER TO FORCE SELL YOUR SHARES IN THE AFTERNOON. Call your remisier to help you sell your shares earlier.
Margin Trading
Basic terms that you must understand,
1. Share value - the value of the shares traded on KLSE.
2. Pledge value - the value of shares you buy with margin account asking for finance
3. Capping - the ceiling price or maximum % of the share that your institute allows to finance you
4. Concentration - counted in % for each share you build in this margin portfolio
If you buy blue-chips mother shares, Malaysian broker firms normally give you 100% capping value. Which means that they will finance 100% or the full share value, still subject to the concentration in your margin portfolio.
To build a margin portfolio, you are advised and agreed to buy Minimum 3 different shares even before you open the margin account. So, 33.3% for 3 different shares must be balance in order for you to get max finance depends on the type of margin account you open.
CIMB and ECM broker houses will tell you that, structured warrants have no capping value. Meaning, they will not finance you to buy any Call/Put warrants. In other words, you must buy 100% with your cash in your margin account. The reason is, structured warrant itself is a leverage instrument.
So, you must ask your remisier, which type of margin accounts suits your needs. There are T+10, Normal Margin, and other margin and from different broker firms offer different products.
