Rakuten Trade's contra trading gets 800 sign ups within first month

KUALA LUMPUR: Rakuten Trade Sdn Bhd’s contra trading feature, which is a collateral-based online trading mechanism, has seen some 800 sign-ups within the first month since its rollout, accounting for 5.33% out of its client base of 15,000.
Contra trading has also contributed to 20% of the online stock brokerage firm’s revenue in the first month.
This trading option is a new addition to Rakuten’s trading offerings, with the other being the cash upfront option. Some 70% of its contra account holders are existing cash upfront account holders.
Compared with the cash upfront option, which saw 43% of its customer base comprising trading novices, contra trading appears to have gained traction among those with less than three years of experience in trading (42%).
Majority of customers for both trading options are male and are concentrated in major cities such as the Klang Valley, Penang and Johor, of which most of them are of Chinese descent.
While the cash upfront option has attracted a younger demographic between the age of 20 to 30, contra trading has seen a more mature client base between the age of 30 to 40 years old.
Speaking to reporters at a press briefing, Rakuten managing director Kaoru Arai noted that although the awareness on such trading mechanism is still low in Malaysia, he expects the numbers to continue picking up going forward.
Rakuten is stepping up efforts on spreading awareness on this form of trading via roadshows and social media campaigns. The trading option can be found on Rakuten’s iSpeed application.
A contra account is a trading account whereby its trading limit is based on the amount of cash and/or shares placed in the trust account, which are pledged as collateral.
Rakuten allows customers to trade more than the money available in their account, by offering a multiplier of up to five times of the tradable share value.
Selected shares on Bursa Malaysia’s Main Market have been imposed a multiplier of five times, while more volatile shares are imposed a multiplier of three times. Ace Market shares are subjected three times.
Unlike the cash upfront option which has no restriction for its settlement period, contra has a time limit of three days.
Traders can also earn an interest of up to 2.5% per annum via the available cash balance in the account.