This post was first published on 24 January 2018 and has been updated to include the latest information.
This article is 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.
You don’t need to be intimidated or confused by financial jargon and complex investment concepts when you start investing. Learning them is a rite of passage even the most seasoned investors once had to go through.
You can systematically build your knowledge base by reading more books and online articles, talking to friends and family who have already started investing, and even dip your toes into the markets yourself.
In order to start investing in companies and other listed securities on the Singapore Exchange (SGX), one of the first things you have to do is mainly an operational task – open your Central Depository Account, also commonly known as your CDP Account.
What Is Your CDP Account For?
Operated by the SGX, your CDP account provides integrated clearing, settlement and depository facilities for people in the Singapore securities market, for equities (i.e. stocks), fixed income instruments (i.e. bonds) and other listed securities. Do note that there are three types of CDP accounts:
- Individual account
- Joint account (if two individuals wish to jointly own the account) and
- Corporate Account (for corporations).
In this article, we will focus only on the Individual account, which is the most common type of account for retail investors like us.
Stocks and bonds that you buy on SGX are automatically deposited and stored in your personal CDP account, rather than with the broker you used to complete the transaction. This allows you to view and manage all the investments that you have made, even via multiple brokers, through a single CDP account.
Do note that each investor can only hold one direct account with CDP. Another thing you should note is that majority of the brokers in Singapore also offer nominee/ custodian accounts, where they take over the function of storing your investments after completing the transaction. There are pros and cons of doing this – namely paying slightly lower brokerage fees in exchange for less convenience and certain maintenance fees.
Here’s a simple illustration of how the buying and selling of stocks on the SGX is done.
Why You Need A CDP Account?
If you have linked your CDP account to the brokerage account that you are using, stocks that you buy or sell through this CDP-linked brokerage account will automatically be deposited into or withdrawn from your CDP account.
In the case of Singapore incorporated companies, the Singapore Companies Act only recognises investors holding a company’s shares within direct accounts with CDP as shareholders of that company. What this means is that as an investor, you will be accorded all the rights associated as a shareholder of a company if you hold its shares through your CDP account.
In contrast, if you buy shares of a company through a nominee/ custodian account, where stocks that you buy are held by the brokerage firm that you use, then you are not automatically considered a direct shareholder of the company.
How To Open A CDP Account?
Opening a CDP account is a fairly simple process. Before you apply for one, ensure that you meet the following eligibility criteria.
- You must be 18 years old and above;
- You must not be an un-discharged bankrupt; and
- You must have a bank account with one of the following banks in Singapore – Citibank, DBS/POSB, HSBC, Maybank, OCBC, Standard Chartered Bank and UOB.
If you meet all of the above criteria, you can proceed to apply for your CDP account.
Whether you are a Singapore resident with a SingPass login or have a passport from other nationalities, you can now apply and open a CDP account online, without having to submit hard copies of supporting documents. This makes it even faster and more convenient since you can complete the process from the comfort of your home.
Singaporeans with a SingPass login can use Myinfo to sign-up for a new CDP account, which allows you to automatically pull up and auto-fill key information which are required for your application such as your name, date of birth, email and residential address – all of which are already stored within SingPass. Those without a SingPass login can simply use CDP’s online form to register.
This not only means that your registration will be completed quickly, but that you are not required to authentic the information since it’s already authenticated by SingPass.
As a new initiative, SGX has launched its SGX Investor Portal to provide a simple one-stop investing portal with features such as:
- 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.
Step 1: Download and complete the CDP application form on the SGX website.
Step 2: Print a photocopy of your Singapore NRIC, Malaysia Identification Card, or Passport.
Investors, both local and foreign, can open a CDP account.
Step 3: Attach one of the three following original documents or e-statements, dated within last 3 month, to your application form.
This can be either your bank statement from any of the Monetary Authority of Singapore (MAS) licensed banks
Your Central Provident Fund (CPF) statement (available on the CPF website)
Your Latest Notice of Assessment for Income tax (available on the IRAS website)
Step 4: Submit the signed application form and supporting documents through one of the following channels
The broker that you are opening a brokerage account with
Send it by mail to CDP – The Central Depository (Pte) Limited, 11 North Buona Vista Drive, #06-07, The Metropolis Tower 2, Singapore 138589
Drop off the form physically at The Central Depository (Pte) Limited, 9 North Buona Vista Drive, #01-19/20
Alternatively, you can also plan an appointment directly with CDP. While booking the appointment, indicate that you are looking to open a CDP account.
LifeHack: Apply Through The Firm You Are Opening A Brokerage Account With
For those of you who feel it is a hassle to open an account on your own, one alternative will be to simply open your CDP account through the brokerage firm that you are already opening an account with.
If this is the first time you are signing up for a brokerage account, your broker will likely aid in providing you the CDP application form to fill in and submit them, on your behalf, to CDP. This saves you the hassle of having to deliver the application form on your own.
Once you have submitted the CDP application form and all supporting documents, your CDP application is completed. CDP will notify you by post with all your necessary login information in about 10 business days from the day of your application submission.
Unsure of how you can get started on your own investing journey? You can find more helpful content on the For Tomorrow website today.