[DO NOT FALL INTO THE TRAP - ESCERAM]
Today 14 October 2020 is the ex-date for ESCERAM's 1-for-1 bonus issue and 1-for-1 free warrant.
Normally, bonus issue entitlement date is only T+2 where after 2 days and you would be entitled for the shares. However since this is a bonus issue with free warrant, the listing date has been delayed far off to 26 October 2020 (as announced in 2 October 2020 announcement) which is rare. Although your entitlement date is 15 October 2020, the bonus shares that are available to trade shall be on 26 October 2020 which is the available/listing date.
Imagine if you owned 100 ESCERAM shares yesterday and you saw the share price went up high today, you might consider selling 200 shares today since you know the share price has already been adjusted downwards and the shares you owned technically is 200. You contacted your broker/remisier to sell your 200 shares.
And normally, there is T+2 payment terms for each transaction you made if you are not using cash upfront.
What you might fail to notice is that the additional 100 free bonus shares has not yet been credited into your account until 26 October 2020 (which is more than 7 trading days). And hence, this is considered as short selling. Short selling is a fairly simple concept—an investor borrows a stock, sells the stock, and then buys the stock back to return it to the lender. Short sellers are betting that the stock they sell will drop in price.
However, normally the additional 100 bonus shares would be credited into your account within T+2 and therefore you could still buy back the shares that you have short-sell. But in this case, at the end of T+2, you only have 100 shares and you ended up selling 200 shares. Now you are lacking 100 shares to payback.
Now, under Bursa regulation, since you do not have enough shares to settle, you would have to buy-in. Buying-in is the process of buying shares by Bursa Malaysia for settlement for failed trades on behalf of defaulters. Bursa Malaysia shall institute buying-in against the relevant selling POs on the settlement day of the contract, in event that the selling clients' CDS accounts do not have sufficient securities for settlement on due date.
The important thing is the price that you paid for buying-in is higher than the market price. The bidding price for buying-in is 10 ticks above the closing price of the previous trading day. If the closing price for tomorrow is 90 sen, the bidding price that you are required to buy-in would be RM0.95 of the quantity you bought which is 10x additional of your tick size (tick size below RM1 is 0.5sen, hence 10 x 0.05 = RM0.50 extra). This is the cost for ignorance.
At the end of the day, clearly there are manipulators behind this who goreng up the share price and invite the ignorant investors to sell their shares. The investors who do not know this would have to ended up buying-in at a higher bid price.
Hence, advice here is to do your own research before buying or selling.
Share this to your friends and families to prevent them from falling into the trap next time. Learn up this lesson so that you and your friends wont make/repeat the mistake in the future (again).
P/S: If you think in reverse psychology, tomorrow might possibly open high and close higher than today's closing. No buy sell recommendation, trade at your own risks.
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All information provided here should be treated for informational purposes only. It is solely reflecting author's personal views and the author should not be held liable for any actions taken in reliance on information contained herein.
No buy call. No sell call. No bullshit. Only content.
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