Tick size is the smallest movement allowed of a stock price in a share market. By having smaller tick size, the cost of trading reduced. It was hinted before Tick Size is the most critical information and yet many stock investors ignored it. It is especially important for speculators, which most investors are today.
It was mentioned before, the cost of buying stocks in Malaysia can actually be as high as 2.31% as opposed to what most thought off as less than 1%
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One article which never got published due to lack of participation actually said that RM 3 stocks are the worst stocks to speculate in and sub Rinngit stocks are the best choices, investment strategy wise. But there are really not many good choices in sub Ringgit arena.
I haven't run my numbers on this yet but intuitively I think ...
With this tick size reduction, the cost of trading becomes lower, bigger companies become more tradable and fund managers should get immediate HUGE savings so investors should expect higher return even if they don't invest in stocks directly.
This is one of the BEST announcements I have ever witness from our beloved Malaysia ...
I will run some numbers to quantify this change and come back here to share exactly how much will change and what we can do about it. Both for stock investors and mutual fund buyers.
Table 1: Current and New Tick Sizes on Bursa Malaysia
| Securities Price | Current Tick Size | New Tick Size |
|---|---|---|
| Below RM1.00 | 0.5 sen(1/2 sen) | 0.5 sen (1/2 sen) |
| RM1.00 to RM2.99 | 1 sen | 1 sen |
| RM3.00 to RM4.99 | 2 sen | |
| RM5.00 to RM9.99 | 5 sen | |
| RM10.00 to RM24.99 | 10 sen | 2 sen |
| RM25.00 to RM99.98 | 25 sen | |
| RM100.00 and above | 50 sen | 10 sen |
1 comment:
looking forward to your quantitative analysis :) Thanks@! keep it up!
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