Rakuten Trade Review

Company Background & Regulation

Rakuten Trade was established in 2017 as a pioneering joint venture between Rakuten Securities, Inc., a subsidiary of the Japanese e-commerce giant Rakuten, Inc., and Kenanga Investment Bank Berhad, a prominent Malaysian financial services provider. This strategic partnership aimed to combine the robust technological expertise of Rakuten with Kenanga's extensive knowledge of the Malaysian financial market, thereby offering a seamless and innovative trading experience to retail investors in Malaysia.

Headquartered in Kuala Lumpur, Rakuten Trade has swiftly positioned itself as a significant player in the Malaysian trading landscape. The company's entry into the market was a notable event, as it introduced a fully digital trading platform that disrupted traditional brokerage models. This digital-first approach allowed Rakuten Trade to capture a niche segment of tech-savvy investors looking for a more efficient and cost-effective way to engage in stock trading.

Rakuten Trade operates under the regulation of the Securities Commission Malaysia (SC), ensuring adherence to stringent financial standards and practices. As a Capital Markets Services Licence (CMSL) holder, Rakuten Trade is authorised to deal in securities, a testament to its compliance with local regulatory frameworks. While the precise licence number is not publicly disclosed, the regulatory oversight by the SC provides investors with a level of security and trust in the firm's operations.

Client fund protection is a critical aspect of Rakuten Trade's operational framework. The firm segregates client funds from its own, ensuring that customer deposits are held securely and are not utilised for the company's operational activities. Additionally, while specific compensation schemes akin to those found in markets like the UK (e.g., FSCS) are not available, the regulatory oversight by the SC and adherence to best practices in fund management offer a measure of protection to investors.

Trading Fees & Spreads

Rakuten Trade has established a competitive fee structure that appeals to cost-conscious investors. The brokerage offers access to Bursa Malaysia with a transparent and straightforward pricing model. Trading fees are critical for investors as they directly impact net investment returns, and Rakuten Trade's approach is designed to minimise these costs.

The brokerage charges a low commission fee structure, which is one of its primary competitive edges. For trades on Bursa Malaysia, Rakuten Trade imposes a simple fee, starting at RM7 for trades valued up to RM1,000. For transactions exceeding this amount, the fees are structured as a percentage of the trade value, ensuring that costs scale with the size of the investment. This fee structure is particularly attractive when compared to traditional brokers, which often have higher minimum fees and additional hidden charges.

In terms of spreads, Rakuten Trade offers competitive rates, although it should be noted that the firm primarily focuses on stocks and ETFs rather than forex or commodities, markets where spreads are more commonly a consideration. The brokerage provides access to the US market through Rakuten Securities, allowing Malaysian investors to diversify their portfolios internationally. Nevertheless, as spreads are mainly pertinent to forex trading, they are not the primary focus within Rakuten Trade's offerings.

Additional costs such as overnight swap rates are not applicable to Rakuten Trade, given its focus on stocks and ETFs, which do not incur such fees. However, investors should be aware of potential costs related to currency conversion when trading internationally, as well as any applicable deposit and withdrawal fees. Rakuten Trade does not impose any deposit fees, which is a significant advantage for investors looking to maximise their capital efficiency. Withdrawal fees are nominal, and the brokerage does not charge inactivity fees, a notable benefit for investors who may not trade frequently.

Trading Platforms & Tools

Proprietary Web Platform

Rakuten Trade offers a proprietary web-based trading platform designed to provide seamless access to stock and ETF markets, primarily focusing on Bursa Malaysia and the US markets via Rakuten Securities. The platform is user-friendly, catering to both novice and experienced traders with a straightforward interface. It supports essential trading functionalities, including real-time market data and advanced charting tools. However, it lacks some of the more sophisticated features found in global competitors. Despite this, it compensates with a robust performance and an intuitive layout that simplifies stock and ETF transactions.

Proprietary Mobile Platform

The proprietary mobile trading platform is one of Rakuten Trade's standout features, offering a highly rated mobile app available on both iOS and Android devices. The app mirrors the functionality of the web platform, allowing users to trade on the go. It includes real-time price updates, seamless order execution, and an easy-to-navigate interface. The mobile app is particularly praised for its efficiency and reliability, making it convenient for traders who prefer managing their investments remotely. The app also includes push notifications for alerts and updates, ensuring traders stay informed about market movements and their portfolio status at all times.

Charting Capabilities and Order Types

Rakuten Trade provides a range of charting tools designed to support technical analysis. Although not as extensive as some international platforms, the available charting tools allow for basic analysis with various time intervals and chart types like candlestick and line charts. Traders can overlay technical indicators, although the selection is limited when compared to more comprehensive platforms. The order types supported include market orders, limit orders, and stop orders, which cover the fundamental needs of most traders. However, the absence of more advanced order types might limit the trading strategies available to more sophisticated traders.

Alerts, API/Algo Trading, and Third-Party Integrations

Rakuten Trade's platforms include basic alert functionalities, enabling users to set price alerts and notifications for specific stock movements. These alerts can be received via email or push notifications on mobile devices, aiding traders in managing their portfolios more actively. At present, Rakuten Trade does not offer API access or algorithmic trading capabilities, nor does it support third-party integrations. This limitation can be a drawback for traders seeking automated trading solutions or those who rely on external analytical tools to enhance their trading strategies.

Account Types & Minimum Deposit

Account Tiers and Features

Rakuten Trade provides a straightforward account structure with a single standard account type. This account gives traders access to both local and international stock markets, specifically Bursa Malaysia and US markets through Rakuten Securities. The platform supports trading in stocks and ETFs, with no CFD or leverage options available. A unique feature of Rakuten Trade is its loyalty points system, where users earn points for every transaction, which can be redeemed for various rewards. This system is a distinctive benefit that encourages trading activity among users.

Demo Account and Islamic Account

Currently, Rakuten Trade does not offer a demo account, which might be a limitation for beginners who wish to practice trading without financial risk. Moreover, the absence of an Islamic account could restrict its appeal to clients seeking Sharia-compliant trading solutions. The lack of these account types could be seen as a disadvantage compared to brokers that cater to a wider range of client needs through diverse account offerings.

Minimum Deposit and Supported Deposit Methods

One of the significant advantages of Rakuten Trade is the absence of a minimum deposit requirement, allowing newcomers to enter the market without the barrier of a substantial initial investment. This feature is particularly attractive for small-scale investors and those new to trading. Rakuten Trade supports multiple deposit methods, including bank transfers and online payment systems, providing flexibility for users. However, the focus remains primarily on the Malaysian market, which might limit the convenience for international clients looking to deposit funds from outside Malaysia.

Markets & Instruments

Rakuten Trade offers a focused selection of financial instruments, primarily centred around equity markets. As a brokerage with a strong emphasis on stocks and ETFs, it provides investors access to Bursa Malaysia, making it particularly appealing for those interested in Malaysian equities. Currently, Rakuten Trade offers an extensive selection of stocks, with over 1,000 equities listed on Bursa Malaysia available for trading. This covers a broad range of sectors, allowing investors to diversify their portfolios within the Malaysian market.

Beyond the local market, Rakuten Trade extends its reach to the United States, facilitated through its association with Rakuten Securities. This enables clients to trade a selection of U.S. stocks, providing an opportunity to invest in some of the world’s largest and most influential companies. However, the focus remains primarily on well-known stocks, and the breadth of U.S. equities is not as extensive as dedicated international brokers.

In addition to stocks, Rakuten Trade offers a selection of Exchange Traded Funds (ETFs), which are available both on the domestic Bursa Malaysia and in the U.S. markets. While the number of ETFs is more limited compared to stocks, these instruments allow traders to invest in a variety of asset classes and sectors through a single security, facilitating diversification. Despite its limited range of asset classes, Rakuten Trade’s strong focus on equities and ETFs makes it a suitable choice for investors with specific interests in these markets.

Safety & Security

Rakuten Trade places a high priority on the safety and security of its clients' funds and data. The broker is regulated by the Securities Commission of Malaysia (SC), which imposes strict regulatory compliance standards, ensuring that Rakuten Trade adheres to best practices in safeguarding client interests. One of the key safety features is the segregation of client funds, which are kept separate from the company’s operating funds. This ensures that client money is protected in the unlikely event of the broker’s insolvency.

In terms of cybersecurity, Rakuten Trade employs robust measures to protect customer data and transactions. The company utilises advanced encryption technologies to secure all online communications and trading activities, minimising the risk of cyber threats. Additionally, regular security audits and monitoring are conducted to ensure the integrity of its systems. While Rakuten Trade does not offer negative balance protection, the limited leverage of 1:5 mitigates the risk of clients incurring significant losses beyond their initial investment.

Who Is Rakuten Trade Best For?

Rakuten Trade is particularly well-suited for investors who are focused on trading Malaysian equities and ETFs. Its comprehensive access to Bursa Malaysia makes it an ideal choice for local investors or those looking to gain exposure to the Malaysian market. Furthermore, the integration with Rakuten Securities allows clients to expand their portfolios into the U.S. market, albeit with a more selective range of stocks.

The brokerage is also an excellent option for cost-conscious investors. With competitive fees and no minimum deposit requirement, Rakuten Trade provides accessibility to both novice and experienced traders who wish to manage their investments efficiently without incurring substantial costs. The proprietary web and mobile platforms are user-friendly, catering to traders who value convenience and efficiency in executing trades.

However, Rakuten Trade may not be the best fit for investors seeking a more diverse range of asset classes, such as CFDs, forex, or commodities, as these are not offered. Additionally, traders seeking high leverage opportunities or those with a preference for more specialised financial instruments may need to consider alternative brokers that cater to these needs.

• Ideal for investors focused on Malaysian equities and ETFs.
• Suitable for cost-conscious traders due to competitive fees and zero minimum deposit.
• Beneficial for users who prefer straightforward, user-friendly trading platforms.
• Not ideal for those seeking a broad range of asset classes beyond stocks and ETFs.
• Unsuitable for traders looking for high leverage opportunities.
• Limited appeal to global investors looking for extensive international market access.