- Introduction

Rakuten has recently introduced foreign share trading for users in Malaysia, offering the opportunity to invest in U.S stocks such as Apple, Google, Tesla, Microsoft, and others through their platform. This feature provides a cost-effective way for Malaysians to access the U.S stock market. The platform is currently in beta testing, and individuals can already begin registering for a Rakuten cash upfront account, receiving approval within an hour or two. After approval, users will be able to start purchasing U.S stocks, with the foreign trading service approval process taking up to three U.S working days.

This joint venture between Malaysia's Kenanga Investment Bank Berhad and Japan's Rakuten Securities, a subsidiary of Rakuten Group, operates as a licensed and regulated fintech player under the digital broker section of the Securities Commission Malaysia. Using Interactive Brokers as their back-end support, trade executions and settlements are handled by the industry-leading broker, providing a level of security and reliability. While there has been no official clarification on insurance for stocks and cash, it is likely to be similar to Interactive Brokers US, where stocks are insured by the Securities Investor Protection Corporation (SIPC) for up to $500,000.

- About Rakuten Trade

Rakuten Trade, a joint venture between Kenanga Investment Bank Berhad and Rakuten Securities, is a licensed and regulated fintech player under the digital broker section. As an industry leader in Malaysia, Rakuten Trade provides an avenue for individuals to access foreign share trading, focusing initially on U.S. stocks. They offer an affordable fee structure for trading U.S. stocks, featuring a minimum brokerage fee of 7 Ringgit per trade, potentially making it an attractive option for Malaysian investors. Furthermore, Rakuten Trade stands out by offering a fully online account opening experience and partnering with Interactive Brokers for trade executions, ensuring speedy and reliable services for its users. Additionally, Rakuten Trade's collaboration with respected stock research firm, The Motley Fool, adds value by providing free stock research reports to users.

Rakuten Trade's incorporation of user-friendly features, such as quick account approvals and seamless fund transfers, align with the evolving needs of modern investors, particularly younger millennials. The platform's commitment to providing live share price data and research reports further positions it as a comprehensive solution for those looking to invest in U.S. stocks from Malaysia. Despite limitations such as the absence of fractional shares trading and only offering the U.S. market access initially, Rakuten Trade's regulated status and cost-effective fee structure make it a viable option for those seeking accessible foreign stock trading.

- Fees and Pricing

Moving on to the fees and pricing section, Rakuten Trade's brokerage fee ranges from as low as 7 ringgit to a maximum of 100 ringgit per trade. This fee is before any stamp duties and clearing fees, if applicable. For most traders, the fee would likely fall within the range of 1000 ringgit to 10,000 ringgit, equating to around 9 ringgit per trade or approximately 2.2 US dollars. Comparatively, this rate is favorable, especially when contrasted with other licensed brokers in Malaysia. For instance, MITF Invest charges 5 US dollars per trade, which is twice the price of Rakuten Trade, while FSM1 Malaysia fees stand at 8.80 cents per trade, more than triple the price. Additionally, Rakuten Trade claims that there are no fees charged for any corporate action handling, translating to no dividend handling fee or custodian fee.

However, there is a currency conversion spread that is applicable to traders. While Rakuten Trade has stated that there are no conversion fees, the exact percentage of the conversion spread has not been disclosed. It is estimated to be around one percent, akin to the rates imposed by other brokers such as MITF Invest and FSM One Malaysia. Furthermore, it's important to note that currently, users cannot maintain a US dollar balance in their Rakuten account. This means that for each trade, there will be currency conversion losses incurred, once for the purchase and once for the sale. This might present a significant limitation for some traders and is worth considering when evaluating the overall cost of trading with Rakuten Trade.

- Pros and Cons

One of the pros of using Rakuten Trade for foreign share trading is its licensing by Securities Commission Malaysia, offering a level of security and assurance for users. The brokerage fees are relatively affordable, starting at a minimum of 7 ringgit per trade, making it a cost-effective option for trading US stocks. The platform also boasts a fast and fully online account opening experience, with approval within an hour and foreign equity account approval in 2-3 US working days. Additionally, Rakuten Trade's partnership with Interactive Brokers for trade executions ensures efficient and reliable transactions. The collaboration with Motley Fool to provide free stock research reports also adds value for users who seek additional market insights.

However, there are some limitations to consider. Rakuten Trade currently does not offer fractional shares trading, which may deter investors looking for more flexibility in purchasing US stocks. Furthermore, the platform's coverage is limited to the US market, with plans to introduce the Hong Kong market in mid-2022, restricting access to other major stock markets. Another concern is the absence of a US dollar balance in the account, leading to currency conversion and potential foreign exchange losses for each trade. Lastly, the platform's interface may not be the most aesthetically appealing, although it fulfills its functional requirements.

- Recommendation

In conclusion, Rakuten Trade offers an attractive option for Malaysians looking to invest in US stocks. The platform's partnership with Interactive Brokers provides a sense of security and reliability, and its affordable brokerage fees make it a competitive choice in the market. The quick and easy account opening process further adds to its appeal, and the convenience of funding the account in Malaysian Ringgit is a major advantage. Despite some limitations such as the lack of fractional shares trading and coverage limited to the US market, Rakuten Trade remains a compelling choice for those primarily interested in US stock trading.

For individuals seeking a wider range of international investment opportunities or more sophisticated trading features, Interactive Brokers might be a more suitable option. However, for beginners or those focused on the US market, Rakuten Trade stands out as a user-friendly and cost-effective platform. Overall, Rakuten Trade is recommended for individuals looking to enter the US stock market with a licensed, reliable, and accessible platform.

Highlight

Rakuten has just launched a new feature that allows individuals in Malaysia to buy U.S. stocks like Apple, Google, Tesla, and Microsoft at an affordable fee.

Rakuten Trade is a joint venture between Malaysia's Kenanga Investment Bank Berhad and Japan's Rakuten Securities, regulated by the Securities Commission Malaysia and using Interactive Brokers for trade executions.

The brokerage fee ranges from 7 to 100 ringgit per trade, making it affordable for most traders. However, there are limitations, including no fractional shares trading, limited stock market coverage, and the absence of a U.S. dollar balance in the account.

Pros of using Rakuten Trade include a relatively low brokerage fee, fast and fully online account opening, and partnership with The Motley Fool for stock research reports. On the downside, the platform does not support fractional shares trading, offers limited market coverage, and lacks a U.S. dollar balance feature.

In conclusion, Rakuten Trade is a suitable choice for those primarily interested in trading U.S. stocks from Malaysia and prioritize the SC Malaysia license and an easy account opening process. However, for more flexibility in trading multiple foreign stock markets and various products, other options like Interactive Brokers may be preferable.

FAQ

Q: What is Rakuten Trade and what does it offer?

A: Rakuten Trade is a joint venture between Kenanga Investment Bank Berhad and Rakuten Securities, providing a platform for Malaysians to trade U.S. stocks such as Apple, Google, Tesla, and Microsoft. It offers affordable fees, fast account approval, and access to a range of stocks.

Q: How does Rakuten Trade differentiate itself in the market?

A: Rakuten Trade stands out by offering affordable brokerage fees, partnering with industry-leading brokers, and providing a secure platform for trading U.S. stocks. It also offers a user-friendly interface and access to live share price data and stock research reports.

Q: What are the fees associated with Rakuten Trade?

A: The brokerage fee ranges from 7 to 100 ringgit per trade, with additional charges for clearing fees and currency conversion spread. There are no fees for corporate action handling, such as dividend handling or custodian fees. However, there may be limitations in the absence of fractional shares trading and the need for currency conversion for each trade.

Q: What are the pros of using Rakuten Trade?

A: Pros of using Rakuten Trade include its licensing by the Securities Commission Malaysia, affordable brokerage fees, fast and fully online account opening, partnership with established brokers, integration with research firms like Motley Fool, and no minimum amount required to start trading.

Q: What are the cons of using Rakuten Trade?

A: Some of the drawbacks of Rakuten Trade include the absence of fractional shares trading, limited coverage of stock markets, the need for frequent currency conversion, and the platform's user interface, which may not be as sophisticated as other platforms.

Q: Is Rakuten Trade recommended for trading U.S. stocks from Malaysia?

A: A short answer is yes, if one prioritizes licensing, easy account opening, and trading U.S. stocks. However, for those seeking flexibility in trading multiple foreign stock markets and a wider variety of products with lower commission fees, other options like Interactive Brokers may be more suitable.

Conclusion

In conclusion, Rakuten Trade offers an appealing opportunity for Malaysian investors to trade U.S. stocks at an affordable fee. The platform's partnership with Interactive Brokers for trade execution and custody of stocks adds a layer of credibility and security. While the lack of fractional shares trading and limited market coverage may present some drawbacks, Rakuten Trade's user-friendly account opening process, reasonable fees, and collaboration with The Motley Fool for stock research reports make it a compelling option for those looking to begin trading U.S. stocks. However, for those seeking more extensive market coverage, multiple trading options, and lower commission fees in the U.S. market, Interactive Brokers remains a strong contender. Overall, Rakuten Trade is a viable choice for those interested in trading U.S. stocks from Malaysia, particularly with the current incentives for early sign-ups.