Wednesday 1 October 2014

High cost for small transactions on Bursa

I wrote about the issue of high transaction costs on relatively small orders before.

By chance I run into the following share buyback by China Stationary:

China Stationary bought 100 shares at a price of RM 0.13 for a total amount of RM 54.01.

In other words, the shares cost only RM 13.00, the commission however a whopping RM 41.01!

In one word: madness.

If Bursa Malaysia actively wants to encourage more retail investors to participate (many of whom might trade for smaller amounts), they really should solve this issue.

In my previous blog posting I gave two simple solutions:
  • either raise the minimum board lot size for shares trading at lower prices (in Hong Kong for instance penny stocks go in lots of 10,000 shares)
  • or lower the minimum brokerage for these small orders.

1 comment:

  1. real disadvantage to retailers because sometimes institutional play the 1 lot game - Bursa is not serious about retailers, just wanted to lure us (through roadshow) in for fat commission to the investment banks.

    another point is the less than 1(odd) lots held by retailers, lose-lose situation for company and retailers. Company has to maintain shareholder related holding cost (annual report/warrant issue, etc) and retailers stuck holding it.