Now that we have covered the basics of setting up your first brokerage account in our last segment, we intend to go into more details of setting up your first trade, and the things to take note of. Below we have some pointers of things to look out for when you are ready to start trading.
- Readers may want to take note of the different products offered by the different brokerage houses they want to sign up with. While the standard product is equities/shares, some of the popular ones include Exchange Traded Funds (ETFs) and Real Estate Investment Trusts (REITs). Make sure that the brokerage company of your choice offers these products if you want to buy them as well.
- Some brokerage companies offer live stock feeds for their customers while others charge for providing this service. Having live stock feeds will be beneficial because the investor gets to see frequency of the trades for the stock. For example, OCBC securities provides live feed for the local market but 15 minutes and 20 minutes delayed for its NASDAQ and NYSE markets. Stock Feed (US). Readers might be keen to find this out, especially if they intend to delve into the US markets.
- Also known as settlement date. Most of the settlement dates for equities are about the same. It should be Trade date+3 – this is the date where the trade will settle and exchange of funds will occur. For example, if an investor purchased shares on 8th of July, the trade will settle 11th of July so he has to ensure there are sufficient funds in his account on that day. Otherwise, the brokerage house might rightfully be able to sell away the security.
- This is very important. Tick size is the next asking price/bid price that an investor can enter into the system to log the trade.Below is an example of a tick-size chart given the price of a security.
Price Range New
Below 0.20 0.001
0.20 – 0.995 0.005
1.00 – 1.99 0.005
2.00 – 9.99 0.01
10 and above 0.01
For example, currently, Breaktalk (Ticker: 5DA) is trading at $0.935. If an investor wants to purchase 5 lots of the share at the next tick, he has to do so at a price of $0.940 ($0.935 + $0.005)
In addition to opening an account with a brokerage house, the below will cover the peripheral accounts that you will or that you may need to start trading.
Opening of CDP Account
As informed previously, if you are opening your first trading account with a brokerage house, they will assist with this process. But for readers who may want extra reference marterial, the SGX website is located Here.
Quote: How do I open a CDP account?
Simply proceed to our customer service counters or SGX Securities Member Companies with your identification card or passport, whichever is applicable. Alternatively, you can approach a Depository Agent to open a sub-account.
Readers may want to gain reference from this OCBC Securities form. Opening of Account. There is one part where they require you to fill in the details for the CDP account.
Trade the US Markets
Investors who want to trade the US Market have to fill in this W-8BEN form. Now this is where your trading representative will come into the picture. Let him know of your intention to trade the US market and follow his instructions. He is there to help you and try to maintain close contact with him.
Specified Investment Products (SIP)
This is a new guideline set by MAS to require all investors who want to trade certain products to meet any one of the three criteria. If the investor does not meet any of the criteria, he/she has to take an online quiz and has to pass it to trade the products. Standard SGX shares are not considered as a SIP. The trading assistant will provide you with more information when you open a trading account. But be sure to read up Here and Here for more information on SIPs.
There you go, hope it does give you further insights apart from the usual comparisons of the fees and charges. Please feel free to post on the comment page if you have any questions.
Royalty-free photo from Getty Images. Used with appreciation.
Bonds and Fixed Income