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We get emails time to time from readers who are new to investing about how to open a brokerage account in Singapore. Most of time, we simply point them to our stockbroker (who basically sets everything up for them).
But we realised there are other people who may also be interested in knowing how to open a brokerage account — and the things that go into choosing the right brokerage — but just haven’t gotten around to asking how it’s done. So we decided to do a quick, simple guide on how to open a brokerage account for those who need a little bit of advice.
But first things first — before you open a brokerage account, you need to choose a brokerage firm. Singapore brokerage firms are very nearly similar in the fees they charge (S$25) and the facilities they provide. But there are still some minor differences (e.g. ease of using trading platform, level of support, etc.) that may tip the scales in favour toward one particular brokerage for you.
So before we go into the steps of setting up a brokerage account, here are some things to consider:
Before you open a brokerage account with a brokerage firm in Singapore, you first need to open a central depository (CDP) account. What is the difference?
A brokerage account allows you to trade shares through your brokerage firm. The CDP account is where all the shares you purchase from the local stock market (i.e. the SGX) are placed. The CDP account is held directly by the investor (you) which means you are the direct owner of the shares. Being the direct owner also gives you certain advantages — voting rights, the right to attend AGMs, etc. Do note you can have multiple brokerage accounts with different brokerages but you only need one CDP account.
The other option is to have your shares held in a nominee (custodian) account by your brokerage. This means the shares are bought under your brokerage’s name on your behalf and then placed in a nominee account assigned to you. Currently, four brokerage firms hold your stocks in nominee accounts — Citibank Brokerage, Standard Chartered, SAXO Markets, and FSMOne.
You can read more about the pros and cons between using a CDP and nominee account.
When you compare fees among Singapore brokerages, you notice that all of them charge more or less the same commission fees:
|Brokerage||Min. Fees (S$)||Trading Commissions|
|≤ S$50K||> S$50K-100K||> S$100K|
|Lim & Tan Securities||25||0.28%||0.22%||0.18%|
|Maybank Kim Eng Securities||25||0.275%||0.22%||0.18%|
|UOB Kay Hian||25||0.275%||0.22%||0.20%|
Fees shown are for SGX Singapore dollar stocks only. Fees may vary for foreign-listed stocks and foreign currency-denominated stocks. Updated as of 21 October 2019.
You’ll notice a few exceptions — Citibank Brokerage, SAXO Markets, and Standard Chartered all charge lower commission fees. The reason for their lower prices is because these brokerages hold your stocks in a nominee account instead of your CDP account, which is less popular with local investors. One big feature about SAXO I’d like to mention is their access to 29 exchanges around the world — perfect for the global investor.
Singapore also recently welcomed a new player with the entry of FSMOne. FSMOne also charges a low commission fee and provide access to the Hong Kong and U.S. market. FSMOne charges roughly the same fees for Hong Kong/U.S. stocks and has no custodian fees — great news if you want to invest in foreign stocks. Like Citi, StanChart, and SAXO, your shares are held in a nominee account when you trade with FSMOne.
I’ll assume you plan on trading in the local stock market since you’re to looking to open a brokerage account in Singapore. But besides the SGX, you may also be interested in stocks listed in foreign markets like Malaysia, Indonesia, Thailand, Hong Kong, the U.S., etc. If that is the case, you probably want to check if a brokerage offers you access to the markets you want.
Do note that foreign shares are not held in your CDP account, instead they’re held in a nominee account with your brokerage. Most local brokerages charge S$2 per month per counter for foreign stocks. This can add up to quite a bit if you invest quite a bit overseas (in which case you may prefer to go direct to a foreign brokerage firm to save on fees).
For U.S. markets, I personally prefer to use a U.S. brokerage as their commissions are much cheaper at around US$5 per trade (Interactive Brokers goes as low as US$1 per trade). A few U.S. brokerages like thinkorswim have Singapore branches which can come in handy in case you need any support.
Besides market access, you may also want to consider the types of investment products available to you. Besides stocks, brokerages may also offer access to ETFs, unit trusts, bonds, options, futures, CFDs, etc.
Some investors may want access to some of these products – for example, I may want to use put options while waiting to purchase a stock. But if you’re not familiar with them and new to investing, then it’s probably best to stay away and stick to investing in just stocks, bonds, and certain ETFs.
If you like to place your trades online or on your mobile often, then you may like having an online trading platform/app that is easy and intuitive to use — though this is subjective and comes down to personal preferences. If you’re heavy into technical analysis then features like price charts and technical indicators may be important to you as well.
If so, you may consider trying a demo of the brokerage’s trading platform to see if you like using it. The last thing you want is be confused by your brokerage’s trading platform and you end up keying in the wrong trades which could cost you a lot of money.
Probably the most important factor when it comes to choosing a brokerage is its reputation. We don’t want to be caught in a situation where a brokerage firm goes bust when you have thousands (or millions) of dollars of your hard-earned money kept with them. Even though your stocks are protected in a CDP or nominee account, things can get messy!
MF Global, one of the world’s largest derivatives brokerages, misused US$1.6 billion of its customers’ funds to cover its own trading losses before the brokerage firm ultimately filed for bankruptcy in 2011. Local investors of MF Global Singapore were hit and feared they might never get their investment funds back. It’s therefore important to check a brokerage’s history and look for any warning signs that might be cause for alarm. In MF Global’s case, the firm had a series of perceived liquidity problems and was hit with large fines and penalties starting in 2008 before it finally collapsed in 2011.
When it comes to SGX retail brokerages in Singapore, all of them are tightly regulated by the MAS and many have been around for decades. For example, Lim & Tan Securities and Phillip Securities were both established in the 1970s. Some brokerages are also owned by banks which are household names with Singaporeans.
Find a dedicated stockbroker that is able to give you great service and timely support. Most of the time, my stockbroker is a quick WhatsApp text, email or phone call away. And even though I can log in to trade online, I usually contact my stockbroker directly and he gets the job done.
I understand that finding a good trading representative that suits your needs can be hit or miss at times, but if you manage to do so, that’s great! I can’t mention the number of times my stockbroker has been there to help me settle any administrative issues or answer any queries I’ve had regarding my trades. On the other side of the coin, great service also means being a good client. So don’t pester your stockbroker incessantly and only approach them if you really need their assistance.
Most importantly, you want a stockbroker that follows your investment objective. If he understands that you’re a medium/long-term investor, he shouldn’t be calling you to offer daily market commentary (unless you request it) or lure you into speculating on short-term trades.
Even though a stockbroker relies on your trading commissions to earn his living, an honest one will not put his interests over his clients’. So make sure you find a stockbroker you can trust and who is candid with you at all times.
To open a CDP account, you need to have a bank account with one of the following banks in Singapore – Citibank, DBS/POSB, HSBC, Maybank, OCBC, Standard Chartered Bank and UOB.
Download and fill up the CDP application form, include your supporting documents, and mail it to:
The Central Depository (Pte) Limited
11 North Buona Vista Drive #06-07
The Metropolis Tower 2
There are basically two ways to open a brokerage account:
a) Open an account online
Simply download and fill up the application form, include your supporting documents, and mail it to the brokerage’s mailing address. You can also open an account directly online if the brokerage offers that feature.
To make things easier, we’ve included the relevant sign-up links for all Singapore brokerages below:
|Brokerage||Account information||Full price list||Trading platform||Application form|
|Lim & Tan Securities||View||View||Demo||Download|
|Maybank Kim Eng Securities||View||View||Demo||Download|
|UOB Kay Hian||View||View||Demo||Download|
b) Head to the office
If you absolutely hate dealing with paperwork (like my wife) or you’re not sure how to fill up the forms, then you can head down to the office of the brokerage of your choice and have a representative help you complete the entire process on the spot.
Another advantage when you head down to the office is that they can also assist you to open a CDP account if you haven’t already done so, which means you can skip Step 1. Sweet.
Opening a brokerage account is the first step you need to take to start investing; you literally can’t trade without one! So I hope this simple guide gives you some clear directions and helps you open a brokerage account in Singapore.
If you have any questions that you think we could help with, simply ask in the comments below and we’ll be glad to share what we know. Happy investing! 😊