What is CDS? - Kakiforex | Forex markets for the smart money. What is CDS? What is CDS?

April 8, 2021

What is CDS?

 What is CDS? If you are just getting used to the world of stock investing, a CDS account is essential before you start investing.

This time, the author will share a little bit about what CDS is to Intraday.My readers.

The CDS account is the ‘Central Depository System’ or Central Depository System. This account acts as a method of representing the ownership and movement of securities. CDS account holders enjoy facilities such as obtaining securities transfers and trading solutions electronically on the system provided on Bursa Malaysia.

A CDS account can be opened by an individual who has attained the age of 18 on the date of application, any establishment registered under the Societies Act 1966, a statutory body established under an Act of Parliament and any corporate body incorporated in Malaysia.

A CDS account can only be opened if the individual opens the account either as the beneficiary owner or as a legal nominee.

A CDS account is important for you to buy or sell shares and conduct other CDS transactions on all equity as well as non -equity counters such as bonds, loan shares, warrants and so on.

You can open a CDS account at any Authorized Depository Agent (ADA) registered with Bursa Malaysia such as Kenanga Investment Bank Bhd, BIMB Securities Sdn Bhd and Maybank Investment Bank Berhad.

Your ADA will then open a CDS account and give you a CDS account number. Bursa Malaysia Depository Sdn Bhd will send you a confirmation notice for opening your account by post.

An individual investor is allowed to open only one CDS account with each ADA however a corporate investor can open multiple accounts with the same ADA.

CDS accounts are divided into two, namely Islamic CDS and Conventional CDS. The main difference between the two accounts is that investors who open an Islamic CDS account cannot buy shariah-compliant shares on Bursa Malaysia.

In addition, Islamic CDS account holders will not receive interest like Conventional CDS which earns interest based on the rate of an investment bank.

The third difference is that Islamic CDS account owners cannot trade beyond the amount of investment money available in their ‘trading’ account while conventional ‘trading’ account investors can buy shares even though there is no money in their account.

If you are interested in owning an Islamic CDS account, you can check this link to find out a list of brokerage firms that offer the service: https://www.bursamalaysia.com/bm/trade/our_products_services/islamic_market/bursa_malaysia_i/list_of_islamic_brokers

CDS accounts are also divided into two in terms of shareholding factors, namely CDS Direct and CDS Nominess. CDS Direct is an account registered directly in your name in the stock registrar while CDS Nominess is an account registered in the name of your investment bank and your name as its nominee.

The advantage of registering a CDS Direct account is that stock dividends will continue to be credited to your account if the company pays dividends; can apply for IPO shares; can attend the company’s annual general meeting (AGM) and the company’s annual financial report will continue to be sent to you.

For CDS Nominees accounts, there is a fee that will be charged on dividends; cannot apply for IPO shares using CDS Nominees accounts; cannot attend the company AGM and no financial report will be sent to you.