On 7 July 2020, Interactive Brokers (IBKR), a global brokerage firm, announced the opening of its Singapore office, citing a rapidly growing client base in our financial hub.
Listed on the NASDAQ in the US, Interactive Brokers is a pioneer of global electronic trading with over 40 years of track record, and is best known for its industry-low commission rates, innovative brokerage services and global presence providing access to over 135 markets.
This is good news for Singapore investors.
Why Interactive Brokers Expanded Into Singapore?
Interactive Brokers reported that its client base continues to rapidly increase in Singapore. By opening an office here, investors in Singapore can finally leverage on its platform to invest in Singapore stocks. Previously, investors in Singapore could only use its platform to buy and sell stocks that are not listed in Singapore.
Its Singapore office can also provide a more dedicated on the ground support and better service active traders and the wealth management community here. A local office typically also provides an avenue for brokerages to engage clients more closely with events and value-added services, which may be in store for clients of Interactive Brokers.
The Singapore office, its ninth globally and fourth in Asia, also points to an increasing interest in the Asia and Asia Pacific markets. Interactive Brokers also highlighted that Asia accounted for 37% of its client accounts, which is a substantial increase from 27% in 2017.
Finally, Interactive Brokers pointed out that it is committing to the Singapore financial hub at a point where “other brokers have exited Singapore or decreased their commitment to the country”. This is perhaps hinting at the exit of Charles Schwab in 2019 and DBS Vickers transferring its offline retail securities brokerage business to UOB Kay Hian.
Should I Use Interactive Brokers To Buy And Sell Stocks?
On the Interactive Brokers’ website, it states three main reasons for people to invest via Interactive Brokers.
#1 Low Cost
Known for charging very competitive brokerage commissions and financing rates, Interactive Brokers claims to offer the lowest commissions and states that if an exchange provides a rebate, Interactive Brokers will pass on some or all of the savings directly back to clients.
For stocks and other securities listed in Singapore, there is a fixed brokerage commission of 0.08% of the trade value. There also does not appear to be a minimum brokerage fee which many other brokerages currently charge.
Source: Interactive Brokers
For ETFs listed in the US, it charges no transaction fees, and just US$0.005 per share.
Source: Interactive Brokers
Its transaction fees for other regions are also very competitive, and you can review the entire list here.
In addition, it also charges competitive margin financing interest rates and allow us to earn an extra income on our shares held with Interactive Brokers by lending them to traders who want to short the market.
#2 Global Access
Via a single Interactive Brokers integrated account, investors can access stocks, options, futures, currencies, bonds and funds in more than 135 markets, across 33 countries and in 24 currencies.
This means investors can fund our accounts in multiple currencies and trade assets in multiple currencies, without incurring foreign exchange costs.
#3 Innovative Solutions With Its “Premier Technology”
Interactive Brokers offer technological solutions that caters to new investors as well as sophisticated traders and wealth managers. We can visit the Interactive Brokers website to find out more about these technology.
Source: Interactive Brokers
Opening An Interactive Broker Account
The process was fairly quick and straightforward. We can apply for an Interactive Brokers account within 10 minutes and can be completed entirely online, without needing to print anything or send in any hard copy documents – very convenient.
I won’t go into details, save for the fact that we should have our MyInfo details updated and use it to apply for our account, and that we need to have our mobile phone, to receive an authentication code, with us when we start the application process.
When we did this (and performed other functions like try to fund our account), we were routed to the Australian website, as it had a .au at the end, after inputting my initial information. Found that slightly strange, but I figured they’re still new so there may be bugs to be fixed.
At the end of the application process, there was a notification that it will take a few days before the account application is approved. So, we cannot start trading immediately.
How To Fund My Interactive Brokers Account In Singapore?
There are two ways to go about funding our Interactive Brokers account: 1) via a bank wire, which can take up to four business days, and 2) by transferring securities we already own from another firm.
Choosing to wire in money simply means we will receive the account information and need to log into our bank accounts to make the transfer to the account details provided by Interactive Brokers.
We can also choose to transfer multiple currencies, namely British Pounds, Chinese Yuan, Hong Kong Dollars, US Dollars and Singapore Dollars, into our accounts.
It does look like Interactive Brokers only offer a custodian account, which means that we will store our investments with Interactive Brokers rather than in our CDP Account after buying stocks.
We can choose the Basic FOP Transfer option, which allows us to transfer our securities kept in another custodian account in Singapore, or with another brokerage internationally, to Interactive Brokers, free-of-charge.
Buying And Selling Stocks On Interactive Brokers
As mentioned earlier, one of the main advantages of using Interactive Brokers is its industry-low trading commissions, which is 0.08% of the transaction cost for Singapore stocks, and can even be free if we invest in US-listed ETFs and US$0.005 for US-listed stocks.
However, we found that we may not have live market data when investing with Interactive Brokers. To receive it, there may be some charges involved. For example, live SGX prices are costed at a hefty $13.00 a month while live prices of stocks on the NYSE are more affordable at $1.50 a month.
While this may benefit traders and wealth managers, it may not be sensible for retail investors to incur such fees.
From what we understand, most local brokerages offer live prices for SGX-listed stocks for free, while prices for foreign listed stocks are usually delayed.
If we do not want to pay a monthly fee, there is also the option of trading via the delayed prices or choosing to receive a “snapshot” of prices whenever we want to trade. The good thing is that costs are relatively low and fees for the first $1.00 of snapshots we request for are waived.
If we are trading the Singapore market, this gives us a runway of about 23 trades each month. On the US markets, this is close to triple that. For many retail investors, it may be sufficient and more worthwhile to utilise this method to invest.
Using Your Interactive Brokers Account
While waiting for our Interactive Brokers account application to complete, we can explore some features offered by Interactive Brokers on its Traders’ Academy, including its IBKR Trading Tools, Investment Products, Investment Analysis, and other. In total, there are 49 courses we can explore.
In addition to this, there are also webinars, videos, traders’ insights, blogs, a trading lab and other features we can leverage on to improve our investing knowledge.