Minimum stockbroking commission rates structure

The Securities Commission (SC) announced in Kuala Lumpur today that it has reviewed and moderated on the proposal for minimum commission rates by the Association of Stockbroking Companies (ASCM) following further representation by various market participants. Following this moderation exercise, the SC has given endorsement for minimum rates to be applied only to retail trades. Institutional and inter-broker trades would remain fully negotiable.

Speaking at a press conference held by the Second Finance Minister, Yang Berhormat Dato’ Dr Jamaludin bin Dato’ Mohd Jarjis, SC Chairman Datuk Ali Abdul Kadir said the minimum commission rates structure will take effect on Monday, 9 June 2003.

The minimum commission rates structure that will be enforced is as follows:

Category of trade Minimum rate per contract
Inter-broker Fully negotiable
Institutional Fully negotiable
Retail trades valued above RM100,000 0.30%
Retail trades valued up to RM100,000 0.60%
E-broking transactions Up to 30% discount

Datuk Ali said the request to impose minimum commission rates was driven by the ASCM. In reviewing the ASCM submission for minimum commission rates, the SC had acted as moderator together with the KLSE. Feedback and views were also sought from the Capital Market Advisory Council (CMAC) and relevant stakeholders in the capital market.

“In reviewing and moderating on the proposal by the ASCM, our main concern was to ensure that any minimum rate structure that was to be applied by the industry should not adversely affect the overall well-being of the capital market, whilst also considering the varying interests of the different parties,” said Datuk Ali. “The decision to allow institutional and inter-broker trades to remain fully negotiable recognised that the participants in the wholesale segment of the capital market are sophisticated and have mutually agreed to operate in a deregulated environment.”

As stated previously, the framework for minimum commission rates will be reviewed one year from the date of implementation.

The setting of minimum commission rates is one of the measures targeted at enhancing the role of intermediaries under the 10 measures to enhance the capital market announced on 11 March 2003. The Second Finance Minister provided an update on the implementation progress of the other measures under that package.

29 May 2003