Share Trading: Nominee vs Direct CDS account

The Difference between Nominees CDS and Direct CDS Account?

Did you ever notice that when you open a share trading account with a broker, they will usually ask you whether you prefers nominee or direct CDS account? For an ordinary investor, we might not really understand what are the differences and benefits that you can enjoy for both types of CDS (Central Depository System) account.

This article is to help you understand difference between these two types of account. Please find below the comparison tables:

Account Opening

Feature	Nominees CDS Account	Direct CDS Account
Account Holder Name	Under Broker/Bank Nominees Name Eg:RHB CAPITAL NOMINEES (TEMPATAN) SDN BHD FOR Mr xxx(Shareholder Name)	Direct Under Shareholder Name Eg:Mr xxx(Shareholder Name)
Opening Fees	RM 10	RM 10
Trust Account (Cash)	Yes (Link to Bank Saving / Current Account)	Yes (Maintain with Investment Bank)
Cash Balance Interest Rate	Bank Saving Account Rate	Investment Bank Saving Rate
Form to be Signed	Bank Saving account Opening Form,  Trading Account Opening Form	Bursa CDS Opening Form, Edividend Form, Personal Detail Updating Form, Trading Account Opening Form
Apply IPO	Not Eligible	Eligible
ESOS	Eligible with Consent	Eligible
Share Transfer	Only to own account	Can be transfer to any relative’s account

Trading

Feature	Nominees CDS Account	Direct CDS Account
Brokerage Fees	Standard Charges Apply	Same as Nominees
Settlement Period	Trading Day +3	Same as Nominees
Collateral Limit	Cash   RM 1   : Limit RM 2-3 Stock   RM 1   : Limit RM 2-3	Same as Nominees

Broker Comparison

After Trading

Feature	Nominees CDS Account	Direct CDS Account
Payment Method	Bank-in to Saving/Current Account	Bank-in to Investment Bank Account
Paperwork on Corporate Action	Handled by bank with Nominees Charges	Handled by Shareholder with assistant from broker
Dividend	Bank-in to Bank Trust account with Nominees Charges	Bank-in to Edividend Account (Provided by Shareholder when Opening Account)
Attending AGM	Yes with Bank Consent Letter	Yes
Report from Company	Yes upon request from broker	Mail to home by respective company

By comparing both account, share investor who owns a Direct Account can enjoy better savings on the "after trading" charges. However, the main advantage that a Nominees Account holder can enjoy is the service of a share broker. The paperwork of corporate actions sometimes is very hard for investors to understand and make decision. And, many investors might missed out in replying those corporate actions if they were a direct account holder. If you're a nominee account holder, please make full use of your nominee charges. In summary, there is advantages and disadvantages to both accounts.

PS: All Margin/Pledge /Foreign Trading accounts are treated as Nominees CDS account.