Rakuten Trade to introduce share investing in US stocks this 12 months, say sources

On the web retail brokerage Rakuten Trade Sdn Bhd, a 50:50 joint undertaking involving Japan’s Rakuten Securities Inc and Kenanga Investment decision Lender Bhd, is expected to enable its Malaysian customers to trade US shares at neighborhood commission fees on its online investing platform this calendar year, in accordance to men and women acquainted with the issue.

The on-line system now lets consumers to devote in Malaysia shares only. However, there is a growing appetite amid local buyers for shares traded elsewhere other than Bursa Malaysia.

It is recognized that Rakuten Trade designs to journey on US-centered buying and selling platforms this sort of as Interactive Brokers to present entry to US shares. Rakuten Trade CEO Kazumasa Mise declined to remark on the make any difference when contacted by The Edge.

Some of the preferred US investing platforms are Interactive Brokers, Schwab-TD Ameritrade, eToro and Robinhood, which provide zero fee on fairness investing. Other service fees may apply, having said that, these as international trade costs on non-US dollar deposits and withdrawals.

“Currently, the higher brokerage expenses are the most significant hurdle for Malaysian traders who want to diversify into foreign stocks. But Rakuten Trade is on the lookout to offer the similar commission fee as that for trading Malaysian stocks when prospects trade US stocks on its system,” a resource shut to the make any difference tells The Edge. Rakuten Trade at present provides the cheapest brokerage charges in the country, from as low as RM7 for trades of up to RM100,000 to a highest of RM100 for trades over RM100,000.

In March, information portal Fintech Information quoted Kenanga team handling director Datuk Chay Wai Leong as stating Rakuten Trade would help its people to trade overseas shares in 2021 as part of a strategy to appeal to a wider viewers in the retail current market, but did not elaborate. The proposed shift would also be in line with Kenanga’s electronic journey.

“This [direct access to the US market] will be a game changer for the stockbroking marketplace in Malaysia,” claims one more supply.

A quick check out by The Edge exhibits that, to devote in US shares from Malaysia, the trading rate or fee of a number of local financial commitment banks starts from .3% to .6% for offline trades and from .25% to .35% for on line trades. Brokers also demand a minimal payment of US$25 (RM104). On best of this, there are also transaction costs — comprising a revenue securities rate of .00207% of the shares traded — levied by a international broker to execute the transactions.

Some Malaysians open up lender accounts in Singapore to devote in overseas stocks via brokers there. For some, this could be a time-consuming and cumbersome process and may possibly require travelling to the town state.

Already, Rakuten Trade has disrupted the local stockbroking business by enabling buyers to trade on the internet at the cheapest brokerage fee and it invests a lot in technologies to save fees. And it will not halt right here. Mise informed The Edge in a Nov 9, 2020 job interview that the organization required to emulate Rakuten Securities by supplying a large assortment of solutions on its trading platform.

Kenanga’s Chay was also noted as saying that, future year, Rakuten Trade would be hunting to introduce cryptocurrency trading on its platform as nicely. Kenanga experienced in February acquired a 19% equity curiosity in Tokenize Technological know-how (M) Sdn Bhd, just one of the a few Digital Asset Exchanges certified by the Securities Fee Malaysia (SC). Buyers can now trade cryptocurrencies these kinds of as Bitcoin and Ether on on the internet exchange Tokenize Xchange. The market capitalisation of the world crypto sector stood at US$1.007 trillion as at February 2021, in accordance to coinmarketcap.com.

Rakuten Trade also lately established up a new division — equity product sales — to exclusively make thematic stock thoughts and impartial insights as a signifies to present expert information that can cater for assorted retail buyers, specially the millennials. Vincent Lau was appointed to the newly produced function of head of fairness gross sales powerful from January.

Past September, The Edge, citing people acquainted with the make any difference, noted that Rakuten Trade also planned to launch an original general public supplying.

Kenanga’s Chay explained, when releasing Kenanga’s benefits for the whole 12 months ended Dec 31, 2020 on Feb 25, that Rakuten Trade posted document-substantial account opening and trades final calendar year, with 166,000 buying and selling accounts at stop-December 2020. “Moving forward, we will maintain this development momentum by rolling out enjoyable products and new capabilities on the system to more enrich consumer knowledge.”

Mise tells The Edge it aims to grow the number of trading accounts to much more than 200,000 by May perhaps.

Rakuten Trade closes 2020 with a revenue

Mise suggests the on the web fairness broker shut the economic year finished Dec 31, 2020 (FY2020) on a lucrative be aware — the to start with time because its inception in 2017. This was achieved on the again of a the latest resurgence in retail participation, which fuelled report-superior trading actions in the equities current market.

Firms Fee of Malaysia (SSM) knowledge shows that Rakuten Trade narrowed its web reduction by 11.4% to RM16.26 million in FY2019 from RM18.36 million in the former calendar year, though earnings grew 65.8% to RM9.61 million from RM5.8 million in FY2018. The company’s internet book worth stood at RM31.82 million as at Dec 31, 2019.

“We have taken care of this [profitability] each and every month because making our maiden profit in April past yr,” Mise provides.

The SC Once-a-year Report 2020 showed that the participation rate for retail traders took an upward flip in 2020, increasing to an normal of 32.4% in terms of value traded of RM3.4 trillion. It was drastically increased than the earlier year’s 20.8%, and the five-calendar year normal of 21.4%. This values the Malaysian retail sector at RM1.1 trillion.

In accordance to a sampling of 19,329 most active CDS accounts in August 2020, the SC claims much more than 90% of trades by retail traders aged 39 and under are placed electronically.

“Retail participation and investing for the duration of the next Motion Management Get remained continual on the Rakuten Trade system. We did see, however, a 40% raise in accounts getting activated thirty day period on thirty day period in February,” claims Mise.

Considering the fact that May well 2017, the brokerage has contributed to much more than RM60 billion in full buying and selling worth on Bursa Malaysia. It has a retail industry share of 6.5%, even though its general market place share was far more than 2% as at Feb 28, 2021.