SINGAPORE (Feb 13): Once you have made the decision to start investing, there are two things you need to set up: your Central Depository (CDP) securities account and your brokerage account.
The CDP, which is owned by the Singapore Exchange (SGX), is the platform where all your stocks or securities are housed.
Opening a CDP account isn’t difficult, and comes at no charge; you only need to have a Singapore bank account that is licensed by the Monetary Authority of Singapore (MAS). You do need to be at least 18 years old though, and must not be an undischarged bankrupt.
Once you have all your documents ready, simply submit your application online.
Unlike your CDP account, where there is only one place to look to, there are about a dozen or more major brokerage firms in Singapore for you to choose from.
These include those owned by banks such as DBS Vickers Securities, CGS-CIMB Securities, OCBC Securities, Maybank Kim Eng and UOB Kay Hian. Then there are others that are independent brokerages such as Phillip Securities and Lim & Tan Securities. There are several foreign brokers too, such as TD Ameritrade.
Each of these brokerages gives clients access to various markets although the exact range differs.
Why do you need to go through the extra step of setting up an account with a brokerage firm before starting to buy and sell shares? Brokers are the essential link before you can trade shares. They are the middlemen who help match you with buyers, or sellers.
Once you have your brokerage account, this is when the actual action starts. You now have access to buy and sell shares on the stock market!
Most brokerages now allow you to do the trading yourself on their online platforms. But if you prefer – or when it is necessary – you may also relay your instructions through a broker to place the trades on your behalf. This can be done either in person, or via a phone call.
However, unlike your CDP account, you don’t have to limit yourself to one brokerage account. Depending on the market and type of investments you’d like to make, you can have more than one brokerage account.
It is easy to start one too, as long as you meet the minimum age requirement and are not an undischarged bankrupt. If you’d like to set up an account in person, simply visit your nearest branch.
Where and how to begin? You will need to decide which of the following factors are most relevant to you.
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1. Commission fees
This is one of the first and most obvious considerations, as the fees will eat into your earnings, especially if you trade often. Your fees will also depend on the amount of trade you will be doing – the higher your trade value, the lower your percentage of fees will be.
2. Payment methods
Once the brokers execute a buy order, you are required to pay by two days after the trade is made. This so-called “T+2” settlement date is common across other stock markets. Some clients are fine to keep a cash balance with their brokerages, others make standing arrangements to pay with via a bank account linked to their trading accounts.
3. Access to markets
Not all brokers provide access to all exchanges, but most of the brokerages here do offer trades to the major non-Singapore markets such as Malaysia, Hong Kong and US.
4. Type of products
There are a wide range of investment products for you to put your money on, and not all brokerages offer them. Other than stocks, bonds, and exchange-traded funds (ETFs), you can also invest in options, cryptocurrencies, and contract for difference (CFD).
5. Reputation
A reputable brokerage is everything. Besides knowing that your money is in safe hands and that there is little to no risk that the brokerage will default on payments, you should also opt for a brokerage that is registered with the MAS. A regulated brokerage is bound by law to ensure transactions are secure and transparent.
Below is a list of affordable brokerages you can consider starting with.
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