Your Comprehensive Guide To Opening A CDP Account & Brokerage / Stock Trading Account in Singapore

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Getting started with investing can be daunting. Here's a guide to opening a CDP & brokerage account, a comparison of trading fees, etc.
Your Comprehensive Guide To Opening A CDP Account & Brokerage / Stock Trading Account in Singapore
Your Comprehensive Guide To Opening A CDP Account & Brokerage / Stock Trading Account in Singapore

What are some ways that we can earn passive income? If you did not know, investing is a great way to earn some really good passive income, if done properly!

Becoming familiar with how to invest is a crucial step towards financial independence. Doing this on your own involves opening a brokerage stock account. It requires you to be aware of what you should look out for and know about opening this type of financial account in Singapore.

The most important thing and that you should know first is that you need separate accounts, which is a brokerage account and a Central Depository Account (CDP).

What Is A Brokerage Account?

A brokerage account provides access to securities exchange through a brokerage firm for you to be able to sell and buy stocks along with other securities that are listed. You are not limited to opening a brokerage account with one stock brokerage firm.

What Is A Central Depository Account (CDP)?

What Is A Central Depository Account (CDP)?

The SGX operates a Central Depository Account, and this is where the stocks, as well as other listed securities that you purchase on the Singapore Exchange, are deposited automatically and stored on your behalf.

Unlike a brokerage account, you can only hold a single personal account directly with CDP.

Knowing the difference between a brokerage account and Central Depository Account is essential for getting started in the world of investing.

You can apply for a CDP account and submit your applications conveniently here. Simply apply for an account online and receive it within 15 minutes!

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Finding a Stock Brokerage Firm

You need to find the right brokerage firm. There are several stock brokerage firms within Singapore. They mainly perform the primary function of enabling investors to buy and sell stock and other exchanges in the world on the Singapore Exchange. However, there are several distinct factors that you should take into consideration when choosing a brokerage firm.

When buying and selling stocks, a commission gets paid for every transaction. Most investors often consider commission fees when picking brokerage firms because these fees can reduce their returns. Various brokerage firms within Singapore charge commission for trading on the Singapore Exchange. Generally, the rates are competitive and similar.

Linked vs. Custodian Account

Many brokerage firms provide custodian accounts along with the CDP accounts that they offer.  It is also important to note that several firms provide custodian accounts only.

In contrast to CDP linked brokerage accounts that consist crediting the stocks you buy to your account, a custodian account refers to the brokerage firm as the custodian that holds the merchandise you purchase under its name. It means that if you plan to sell the stocks later, you will only be able to do this through the brokerage firm. On the other hand, commission fees charged for custodian accounts are usually lower.

You should also consider the possibility of additional charges. For instance, if you buy stocks overseas, you will require a custodian account that will charge a fee if you have these stocks.

Paying For Investments

You have the option of paying for your investments through the following methods commonly used:

  • Internet banking
  • Cash
  • Cheque
  • Automated deductions
  • ATMs
  • Automated deductions

Investors may opt for a brokerage account with banks where they have an existing financial relationship and savings account. Local banks might have a bit of an advantage in this case.

Foreign Markets

An investor who plans to invest in overseas markets should think about brokerage firms that can give access to the stocks that they wish to get. Popular markets that are offered by several brokerage firms include Hong Kong, Australia, Malaysia and the US. It can save you the hassle of opening another brokerage account later.

Applying to a Brokerage Firm

After deciding on the brokerage firm that you want to use, you can directly apply to it in two ways.

1. Online Application

You can make an online application through the brokerage firm’s site. All you have to do is follow the instructions provided on the website. The following is a list of brokers that you can consider.

  • UOB Kay Hian
  • RHB Securities Singapore
  • Phillip Securities
  • OCBC Securities
  • Maybank Kim Eng
  • Lim & Tan Securities
  • KGI Securities
  • DBS Vickers Securities
  • CIMB Securities
  • SAXO Capital Market
  • Standard Chartered
  • FSMOne

2. Branch Office

Applying to a Brokerage Firm Branch Office

You can apply in person by going to the branch office to open a stock brokerage account. Find out the documents that you are required to take with you. You may find booths that brokerage firms set up occasionally during investment awareness talks and roadshows. At these booths, you also get a chance to open an account.

Applying for A CDP Account

If you are applying for a stock brokerage account for the first time, you need to get a CDP account at the same time. That is because you will be opening a brokerage account that needs to get linked to a CDP account. It is essential to make sure that you meet the criteria to qualify:

  • Age 18 years and above
  • Must not be undischarged bankrupt
  • Must have a bank account with these banks in Singapore: UOB, Standard Chartered, OCBC, Maybank, HSBC, DBS/POSB or Citibank.

If you are opening a brokerage account for the first time and you are not sure or reluctant about handling extra paperwork, you can consider going a brokerage firm’s branch office. The staff can assist you with processing the documents required for setting up a CDP account and brokerage account concurrently. It saves you the trouble delivering the application form.

You also have the option of opening a CDP account by going in person to the customer service centre or via mail.

After submitting the documents that are required, you may have to wait for some weeks as your submission is processed. You need to wait until your CDP account and brokerage account to both be ready before you begin investing if you are setting up a Central Depository Account for the first time.’

Choosing a Brokerage / Stock Trading Account

Choosing a Brokerage / Stock Trading Account

There are various factors that you need to take into consideration when picking a suitable account.

  • Market access: An investor who wants to invest in overseas exchanges needs to consider market access to other exchanges.
  • Commission Fees

Fees Comparison: Online Stock Brokerage Platforms

Brokerage FirmMinimum Fees (SGD)Trading Fees (based on contract amount, SGD)
Up to $50,000$50K – $100K$100K
Stock Holding: CDP
KGI Securities$250.275%0.22%0.18%
CGS-CIMB Securities$250.275%0.22%0.18%
DBS Vickers$250.28%0.22%0.18%
Maybank Kim Eng$250.275%0.22%0.18%
Lim & Tan Securities$250.28%0.22%0.18%
Phillips Securities$250.28%0.22%0.18%
OCBC Securities$250.275%0.22%0.18%
UOB KayHian$250.275%0.22$0.20%
RHB Securities$250.275%0.22%0.18%
Stock Holding: Custodian$100.08%0.08%0.08%
Standard Chartered$100.20%0.20%0.20%
Saxo Capital Markets$9 – $150.10% to 0.12%0.10% to 0.12%0.10% to 0.12%

Fees Comparison: Broker Assisted Stock Brokerage Platforms

Brokerages (Broker Assisted)Minimum Fees (SGD)Trading Fees (based on contract amount, SGD)
<$50K$50K – $100K>$100K
KGI Securities$400.50%0.40%0.25%
CGS-CIMB Securities$400.50%0.40%0.25%
DBS Vickers$400.375%0.30%0.225%
Maybank Kim Eng$400.50%0.40%0.25%
Lim & Tan Securities$400.50%0.40%0.25%
Phillips Securities$400.50%0.40%0.25%
OCBC Securities$400.50%0.40%0.25%
RHB Securities$400.50%0.40%0.25%

Fees Comparison: Cash Upfront Stock Brokerage Platforms

Stock Brokerage (Cash Upfront) Minimum Fees Trading Fees
KGI Connex$250.18%
CGS-CIMB Securities$180.18%
DBS Vickers$100.12%
Lim & Tan Securities$120.12%
Maybank Kim Eng$100.12%
Phillips Securities$10
(0.08% if you trade more than $250,000)
($8 more if you trade more than $250,000)
OCBC Securities$180.18%
UOB Kay Hian$100.12%$100.08%

Crucial Considerations For Opening A CDP & Stock Brokerage Account

Crucial Considerations For Opening A CDP & Stock Brokerage Account

If you plan to take the plunge into stock trading, there are several key considerations to keep in mind when preparing your trading account.

A lot of attention is getting directed towards investing in stocks, especially at these volatile and unprecedented times with the COVID-19 pandemic. This period of uncertainty is genuinely the ideal time to begin buying into the stock market via a Central Depository and Stock Brokerage Account. You may just be able to make relatively easy and fast profits.

The stock market continues to be an excellent way for people to make money. However, many people get deterred by the risks and lack of awareness regarding how to get involved. It is not as straightforward as setting up a savings account at a local bank. Two separate accounts are required to facilitate trading in stocks:

CDP account serves the purpose of storing your stock holdings

The stock brokerage account is for trading stocks

Here’s A List Of What To Take Note:

  • Make sure you have an account at a local bank. Before beginning, it is essential to note that people above the age of 18 and are not undischarged bankrupt qualify for stocks ownership. You should also make sure that you have an account with a local bank.
  • CDP account: Before setting up a brokerage account, you need a personal CDP account. CDP is a depository that serves to store the bonds and stocks that you buy. Opening and maintaining a CDP account is free. A CDP account can also be useful in holding bond investments.
  • Stock brokerage account: After submitting the application form for a CDP account, you can expect to receive confirmation through the main after a few days When your account is ready, you can choose brokerage firm to set up a stock brokerage account.
  • Trading platforms generally consist of two types. The first one has a link to a bank. It means that the money gets deducted directly from the account when a trade gets executed. The second one is the cash upfront system that you deposit a particular amount of cash is deposited into with the broker before trading.
  • The first trading platform is more flexible in terms of making sure that your money is not idle in an account that does not generate interest. Brokers that offer both options charge less for the second option.
  • Commission fees: Although opening and maintaining a brokerage account is free, the brokerage firm has charges commission fees for each trade. The costs are usually a small percentage of the amount that is traded (between 0.18% and 0.28%).
  • Access to foreign market: Brokerage firms might vary in regards to foreign stock markets where they provide access. They may offer access to other stock markets along with the SGX. If there is a certain foreign market that you want to have access to, it is essential to check the website of the brokerage firm to find out whether it offers access to that particular market.
  • Begin trading: With all the knowledge you need about trading effectively, you can start playing the game. But you should always be aware and conscious of the risks that trading involves.
  • Remember to carry out your analysis and research before getting into the stock market. While making a profit is a luring prospect, losing your wealth is also a possibility if you do not conduct sufficient research before getting into the market.

To get a clearer understanding of how to begin trading in the stock market, learning about the steps that you should take when opening a CDP and stock brokerage account is essential. Online resources have made the process of opening these two types of accounts easier. The main issue that requires keen consideration is choosing the brokerage firm with which you will open an account.

Several Singaporeans are interested in investing, but a significant percentage of them may not consider themselves to be knowledgeable about the process. Investing in stocks for the first time as a beginner is understandably overwhelming.

There is a lot of information that can make it challenging for new investors who want to pick the relevant data regarding investing in stocks. That is why learning as much as you can about the basics of investing in Singapore is a vital step.

There are various great financial websites online to help you get started on your investment journey. They include The Fifth Person, and Dr Wealth.

Although various aspects may seem complicated, investing is not difficult as long as you are willing to put some effort and time into it.

Start Investing Today!

Start Investing Today!

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The journey of setting up a successful investment has to always start somewhere.

Learning and understanding the basics of opening a CDP and brokerage stock trading account in Singapore will sets you on the right path. You can then move towards becoming an experienced investor and grasping essential principals of investment while becoming better at investments.

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