What Is Proprietary Day Traders And Stockists | Bursa Malaysia
If you look at the top volume counters that traded in Bursa Malaysia, you’ll notice majority of the counter are from penny stock counter.
Some of the them includes Ingens, Nicorp, AWC, KPSCB, Asuprem and etc as at today.
Pennies and speculative stock like Metronic Global Bhd (Metronic) and Ariantec Global Bhd (AGlobal), which makes the headline last month after it involved significant price and volume movements.
It was reported that the stock of Metronic Global was trade at more than its paid-up capital. This is highly speculative in nature and not healthy to the stock market. It seems like the stock market is the biggest legal casino in Malaysia.
Have you wonder who are the buyer and seller on all these top volume counters?
Most of these unprecedented daily volume of shares traded in these counters were generated by trader that called Proprietary Day Traders (Pdts) and so-called Stockists.
What Is Proprietary Day Traders (Pdts) and Stockists?
Proprietary Day Traders (Pdts) and also known as Stockists, are a members of participating firms of Bursa Malaysia. They(the trader) has a dealer’s representative license and their trading account opened in the name of a Participating Organisation.
They are the privileges ones as they don’t have to pay for brokerage fee and stamp duty when trading in stocks on Bursa Securities.
Their cost in trading is only paying for the clearing fee which is a tiny 0.003% of the value of the stocks traded.
This explain why they can move or buy and sell any counters traded.
If you calculate their cost of trading(due to lower fee), the Proprietary Day Traders can makes money even the stock moves one price bid even on penny stock. For example the current price for Ingens is trading at RM0.10. When the price move one bid up from RM0.10 to RM0.105, profit would have be make.
As the name implied, they will close their position before the market close.
Their roles in increasing liquidity in the market and reducing the imbalance of long-term investors and short-term traders is important to the stock market. However they must be a fair and orderly market control in place as there is no level playing field extended to retailers and other institutional investors.
* There are 57 PDTs as at today
* They trade for the brokerage firm
* They profit earned has to be shared with the brokerage firm. Brokerage firm will get usually 60% of what the PDTs earned.
* For losses, PDTs will have to bear it 100%
* They can short(naked short selling) the market however it must close all the open position before market close. Therefore they will only trade stock with volume.
## Who says short selling is NOT allowed in Bursa Malaysia?
Media Release by Bursa Malaysia on Proprietary Day Traders (PDTs):
PDTS operate under controlled environment
Posted on 5 April 2012 – 09:08pm
WITH reference to “Proprietary traders must also pay fees” (Letters, March 28), we wish to thank the writer for his views.
Proprietary Day Traders (PDTs) were introduced in January 2007 with the aim of increasing liquidity in the market and reducing the imbalance of long-term investors and short-term traders. Their introduction was also part of Bursa Malaysia’s effort to facilitate a more robust price discovery mechanism. Proprietary traders exist in markets around the world, and in Malaysia, anyone who has passed the exam for a Dealer’s Representative Licence and has five years trading experience can apply to become a PDT.
While PDTs enjoy incentives such as clearing fee rebates if they trade a certain amount in a month and can conduct intraday shorting, it is important to note that there are also restrictions imposed upon them and they operate under a controlled environment as licensed professional traders. For instance, PDTs must close off their short positions within the day. Unclosed short sold positions are deemed to be in violation of the rules. PDTs are not allowed to acquire the shares and all purchase positions must be closed within two days of the transaction date. PDTs are not allowed to trade on the ACE Market and they are strictly prohibited from carrying out trades for clients of brokers.
These restrictions are vigilantly monitored to ensure that the benefits enjoyed by PDTs are appropriately used. Action will be taken against those found to have breached the rules.
Elaine Mariman
Acting Head
Strategic Communications
Bursa Malaysia
from: thesundaily.my/news/341539
The extract of advertisement by OSK Investment Bank Berhad(A Participating Organisation of Bursa Malaysia Securities Berhad) in looking for Proprietary Day Traders (Equities)
Proprietary Day Traders (Equities)-(Kuala Lumpur)
Responsibilities:
- Conduct day trading activities and/or assist the Bank to take its proprietary positions in equities on intra day trades through its Day Trading Activities Account
- Responsible for trading of stocks, and other approved financial instruments / securities as allowed by the Regulators
Requirements:
- Degree in Finance, Accounting, Business Administration, Economics, Marketing or equivalent professional qualifications. Candidates with Diploma in Investment Analysis from RIIAM and CFA holders are encouraged to apply.
- Minimum 5 years working experience as a Dealer’s Representative
- Have good analytical skills with sound knowledge of the securities industry
- Ability to cope with high level of stress and able to make sound trading / investment judgement
- High level of competency in trading strategies, stock market and technical charting knowledge
- Successful candidates are required to hold the Capital Markets and Services Representative’s Licence (CMSRL)