This post was first published on 20 April 2018 and has been updated to include the latest information.
This article is written as part of a DollarsAndSense.sg collaboration with For Tomorrow. For Tomorrow is brought to you by Temasek, in partnership with MoneySmart and DollarsAndSense. All views expressed in the article are the independent opinion of DollarsAndSense.sg.
If learning to invest on your own is on your list of to-dos, then opening a stock brokerage account is one of the first things you need to check off.
In this article, we explain essential things you need to know and look out for when opening a stock brokerage account in Singapore.
The first (and most important thing) to know is that you need to open two separate accounts.
#1 A brokerage account with a stock brokerage firm
Via the stock brokerage firm of your choice, a brokerage account gives you access to the securities exchange where you can buy and sell stocks, as well as other listed securities. You may open a stock brokerage account with more than one brokerage firm.
#2 A Central Depository (CDP) account
Operated by the Singapore Exchange (SGX), a CDP account is where stocks and other listed securities you buy on the SGX are automatically deposited and stored for you. Unlike brokerage accounts, individuals can only hold one individual account with CDP.
For investors who wish to hold their stocks with their brokerage firms as custodians, you may not require a CDP account.
Now that you know the difference between the two accounts that you typically need, let’s find out how you can get started.
Step 1: Find A Suitable Stock Brokerage Firm
The most important step is to identify a suitable brokerage firm.
There are many stock brokerage firms in Singapore. Primarily, they all perform the same main function – enabling investors to buy and sell stocks on SGX as well as other exchanges around the world.
However, there are a few differentiating criteria that you should consider when deciding between brokerage firms.
Commission: When you buy and sell stocks, you pay a commission fee for each transaction. Commission fees are usually the first thing most investors look at when considering brokerages, as the fees could eat into their returns.
Here’s a look at the commission charged by major brokerage firms in Singapore for trading on SGX. Do note that commissions quoted are only for online trading.
|Minimum Commission Fees||Online Trading Fees
(As A Percentage Of Contract Value)
|Below $50,000||$50,000 To $100,000||Above $100,000|
|Stocks Held In CDP Account|
|Lim & Tan Securities||$25||0.28%||0.22%||0.18%|
|Maybank Kim Eng||$25||0.275%||0.22%||0.18%|
|Phillip Securities (POEMS)||$25||0.28%||0.22%||0.18%|
|UOB Kay Hian||$25||0.275%||0.22%||0.20%|
|Brokerage that only offer custodian accounts|
|Saxo Capital Markets||$10||0.08%||0.08%||0.08%|
You can see that by and large, most brokerage firms offer very similar and competitive rates. You can also observe that brokerages that only offer custodian accounts also offer a lower commission charge. In addition to these charges, you also have to foot the following fees when buying and selling on your brokerage.
|Type Of Fee||Fee Amount|
|SGX Clearing Fee||0.0325% Of Contract Value|
|SGX Trading Fee||0.0075% Of Contract Value|
|SGX Settlement Instruction Fee||$0.35 Per Settlement Instruction|
*7% GST applies on fees
CDP-Linked Account Or Custodian Account?
The majority of brokerage firms that offer CDP accounts also offer custodian accounts, and usually charge more attractive commission rates as well.
Unlike a CDP-linked stock brokerage account, where stocks that you buy are credited to your personal CDP account, having a custodian account means that the custodian (i.e. the brokerage firm) will hold the stock that you buy under their name. This also means that if you wish to sell these stocks in the future, you can only do so through the same brokerage firm. On the flipside, commission fees for custodian accounts tend to be significantly lower. Whereas buying via CDP-linked accounts will allow you to buy and sell your stocks with different brokerage firms.
However, you should also note that additional fees may be charged. If you are buying overseas stocks, you will also need a custodian account and will incur some custodian fees.
Paying For Your Investments
You can choose to pay for your investments via these common methods:
- Electronic Payment for Shares (EPS) (via ATMs)
- Giro (automatic deductions)
- Cash at the stock brokerage
- Internet banking or telegraphic transfers
Some investors may choose to open a brokerage account with a bank that they already have a savings account or another financial relationship with. This is where local banks may have a slight advantage.
Investors who intend to invest in overseas stocks should consider brokerage firms that are able to provide access to the markets they’re interested in. Some common markets offered by many of the brokerage firms listed above include the US, Malaysia, Australia and Hong Kong.
This may save you the trouble of having to open another brokerage account in the future.
Step 2: Apply To Your Preferred Brokerage Firm
Once you have decided which brokerage firm you wish to use. You can apply directly to them. There are two ways you can do so.
You can apply online through the website of the brokerage firms. Simply follow the instructions on the respective websites.
- CIMB Securities
- DBS Vickers Securities
- KGI Securities
- Lim & Tan Securities
- Maybank Kim Eng
- OCBC Securities
- Phillip Securities
- RHB Securities Singapore
- UOB Kay Hian
- SAXO Capital Market
- Standard Chartered
Head Down To A Branch Office
Alternatively, you can head down to the branch office in person to open your stock brokerage account. Do take note of any documents that you would need to bring with you.
From time-to-time, you may also find some pop-up booths set up by brokerage firms. This tends to be during roadshows or during investment talks. You can open an account at these booths as well.
Step 3: Apply For Your CDP Account
If this is the first time you are applying to open a stock brokerage account, you will typically also need to open a CDP account concurrently. This is because the brokerage account that you are opening will need to be tagged to a CDP account, unless it’s a custodian account.
Ensure that you meet the following eligibility criteria:
- You must be 18 years old and above
- You must not be an un-discharged bankrupt
- You must have a bank account with one of the following banks in Singapore – Citibank, DBS/POSB, HSBC, Maybank, OCBC, Standard Chartered Bank or UOB.
If this is the first time you are signing up for a brokerage account, and you are unsure or unwilling to handle the additional paperwork, you can head down to the branch office of one of the brokerage firms. The service staff there can help you process all the documents to set up your CDP account and your brokerage account at the same time. This saves you the hassle of having to deliver the application form on your own.
You can also choose to open your CDP account online, with your Singpass by signing up using MyInfo (Singaporeans & PRs only) in 3 to 5 minutes. Alternatively, you can fill in an online form that would take you 6-8 minutes.
[Do note that some branches may not be in operation as Singapore exits COVID-19 Circuit Breaker]
Once you have submitted the documents required, you need to wait for your submission to be processed. This may take a couple of weeks. If you are opening a CDP account for the first time, you will need to wait for both your brokerage account and your CDP account to be ready before you can start investing.
All the information that you need will be sent via mail to your home address:
- CDP Account:
- Account number
- Link to OneKey 2FA Token
- Brokerage Account:
- Brokerage account ID
- Pin for Phone Transaction
- Link to OneKey 2FA Token (This is the same token that you will be using for your CDP account)
Managing Your CDP Account Online
As new initiative, you can now use SGX Investor Portal as a one-stop portal for the following features and resources:
- Single login to view securities holdings of all your brokerage accounts
- View and download up to 24 months of e-statements
- View and download up to 60 days of CDP Notifications
- Set up a Watchlist of counters you are looking into (known as Favourites)
- Subscribe to email notifications
- Apply/change Direct Crediting Service bank account*
- Update Particulars*
* Requires transaction signing using OneKey Token
You will also have easy access to key investment resources from SGX such as:
- SGX Academy
- SGX Investor Road Map
- Securities Borrowing and Lending (SBL) Pool
- CDP Buying-in Reports
- Specified Investment Products (SIP) Qualifications
Going forward, more features including Currency Conversion (CCY) service will be available by mid-2020, and SBL application and Corporation Actions will be introduced by second half 2020.
New to investing? You can visit the ForTomorrow.sg website to read more articles on how you can get started on your investing journey today.