In this post, we will be solely focusing on a guide “How To Open Brokerage Account in Singapore”. It is to help you understand the basics of the Singapore Exchange.
But we will talk about more than that, we will discuss what exactly the (SGX) is, what is a brokerage and a brokerage account, how to get started with a CDP account and its various requirements, a custodial account if you desire to trade internationally, factors to consider when choosing a specific brokerage, and we will leave you with a bit of advice on as we send you on your journey to a wonderland of investment and earnings in the (SGX) market.
The Singapore Exchange (SGX)
The (SGX) is a full-service equity, fixed income, derivatives, commodities, and foreign currency exchange organisation in Singapore. The exchange came into play from the 1999 collaboration of three separate groups the Stock Exchange of Singapore, Singapore International Monetary Exchange, and Securities Clearing and Computer Services Pte.
In 2000, Singapore Exchange or (SGX) posted its shares for public investors to buy into and in 2008 it formed the Singapore Commodity Exchange.
So You Want To Learn More About Stocks?
Investing in stocks is one of the most common ways people earn a passive income both in Singapore and in other areas of the world.
In fact, The Amsterdam Stock Exchange (now Euronext Amsterdam) was the world’s first official stock exchange when it began trading the VOC’s freely transferable securities, including bonds and shares of stocks, and since more people have continued to invest in markets around the world.
While investing itself can be elementary, it can be difficult to decide where to place your funds, or even how to start for the matter. Nobody wants to throw good money away. After all, those are your hard-earned Singapore Dollars.
It’s crucial that you do your research to figure out which markets are likely to expand in the near future and which will not. You may also want to consider consulting an investment consultant if you’re not well rounded in the area of finance. In Singapore, you need two types of accounts to invest in stock and other assets. We will talk about them a little more.
What Is A Brokerage Account?
Before investing in your first stock, you will need to open up a brokerage account. A brokerage account is an account that allows you to buy and sell your stocks, ETFs, certain bonds and REITs.
The brokerages you have accounts with acts as middle-man trading platforms, allowing you to invest through them to get what you want in exchange for a commission. In Singapore, one will need a CDP and a brokerage account to invest in stocks. We will talk more about the CDP account next.
1) First, Get Your Brokerage Account
You will have to start your journey to getting involved with the stock market by opening up a brokerage account. It will give you access, through the brokerage, 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 unless you choose otherwise. But do your research on the specific brokerage and ask questions before getting entangled in any web of stock security entities.
2) Next, You Will Need A Central Depository (CDP) Account
CDP Accounts are operated by the Singapore Exchange (SGX), a CDP account is where stocks and other listed securities you buy and sell on the (SGX) are synonymously deposited and stored in an account. Unlike brokerage accounts, individuals can only hold one direct personal account with a CDP account. A CDP account acts like a personal safe in your backyard for your bought stocks.
Whenever you buy a share in a listed company through the open Singapore market, it gets deposited into your CDP account. There is now a newer method to open your CDP account to get started! As of November 2019, you can choose to open a CDP account online and get your account sorted out within 15 minutes!
CDP Account Eligibility Requirements
There are a few requirements to meet before you can open your account and begin investing in the Singapore Stock Exchange through your online brokerage account. We will show you how to open a stock account with CDP so you can begin your road to (SGX). Once again a CDP account simply acts as a storehouse for you purchased stocks and we will discuss another type of account used for international exchanges later in the blog.
- You must be at least eighteen years of age or older to sign up in person or with online brokers.
- You can not be an undischarged bankrupt. It is essentially a bankrupt person who is not granted an ‘order of discharge’ by a court.
- You must have a bank account with at least one of the following banks CitiBank, DBS, POSB, HSBC, Maybank, OCBC, or Standard Chartered Bank.
If you meet all of the following criteria you can apply for your CDP account today!
Now you’re ready to create your account.
Step 1: Once you have satisfied all pre-existing credentials you will need to download and complete the online application at the (SGX) online website.
Step 2: You will need to print a photocopy of your Singapore NRIC, Malaysia Identification Card or a passport for people from outside the country.
Step 3: You will need to include at least one of the following original documents that will need to be dated within the last three months before your application was submitted. The three document options are listed below:
– A current bank statement from any MAS licensed bank.
– A current Central Provident Fund (CPF) Statement available on the CPF website.
– Your latest notice of assessment from your income tax. It is available on the IRAS online website.
With either of these forms of documents, it is imperative that the address on your identification card or passport matches the address on the corresponding documents you are turning in. Please be sure to verify it is the same to avoid potential delay or rejection in the process.
Step 4: Submit the following documents along with your application:
– To the specific brokerage, you are opening an account with.
– To the Central Depository (Pte) Limited which is located in Singapore.
– Or visit the CDP Customer Service Centre in Singapore. For this option, you will need to bring original documentation of identification via the identification card or passport. The CDP office can be found at 4 Shenton Way #02-01 SGX Centre 2, Singapore, 068807.
In ten business days after your completed application has been submitted for review, CDP will contact you by mail with your log in information. 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 your journey to investment.
All the information that you need will be sent via mail to the address you provide. The information should include a CDP Account the Account number, Password, and a Link to OneKey 2FA Token. For a Brokerage Account the Brokerage account ID, Password, Pin for Phone Transaction, and a Link to OneKey 2FA Token.
So Which Brokerage Should You Choose?
There are many stock brokerages in Singapore. Primarily, they all perform the same function, and that is to allow investors to buy and sell stocks on (SGX) as well as other exchanges all around the world. However, there are a few differential criteria that you should consider when deciding between the brokerages at your disposal.
When it comes to (SGX) retail brokerages in the country of Singapore, all of them are tightly regulated by the Monetary Authority of Singapore and many have been around for a while. But as an example take Lim & Tan Securities and Phillip Securities, they are both established sometime in the 1970s.
Be sure to do your research on which brokers you are interested in, find out how long they have been running and the ups and downs that have come in the midst of the brokerage’s journey and weigh them accordingly.
Things To Consider When Opening Brokerage Account
#1 Commission
When you buy and sell stocks, you pay a commission surcharge for each transaction made by you. Commission fees are usually the first thing most investors look at when considering the different brokerages, as the fees could tear into their profits and affect potential revenue.
#2 CDP Or Custodial Account
Most brokerages that offer CDP accounts also offer custodial accounts, and some brokerages only offer custodial accounts. So which account would be best for you? But that is the purpose of this article. So lets slice through this like a ninja and break down what these terms mean. We already covered what a CDP account is and how to set one up, so let us explain what a Custodial Account is.
Custodial Account – Unlike a CDP-linked stock brokerage account where stocks that you are buying are accredited to your personal CDP account. Having a custodian account means that a custodian or brokerage will hold the stock that you buy under their brand. This also means that if you ever wish to sell these stocks in the future, you can only do so through the same brokerage firm you initially purchased the stock from, to begin with.
On the other side of the coin, commission fees for custodian accounts tend to be dramatically lower. Which allows you to invest in more Singapore Dollars into stocks than into commission. However it isn’t all roses, you should note that additional fees may be charged for buying overseas securities. You will need a custodian account and will incur some type of fee on your account if you are holding overseas stocks in your custodial account.
#3 Accepted Payment Methods
There are several ways to pay for and allot funds for your investments, they include;
Electronic Payment for Shares (EPS),
Giro,
Cheque,
Cash at the brokerage,
and Internet banking or telegraphic transfers.
Some investors may choose to open a brokerage account with the bank that they already have an account with, which seemingly appears to be the easiest option. But do not limit yourself when it comes to matters of investment. Check and compare the brokerages available to you.
#4 Buying Stocks Overseas
So what if you’re saying, ok I want to go all-in and buy stocks, or better yet; buy stocks in other countries as well. Investors who intend to put money in overseas markets should consider the brokerage firms that are able to provide access to the particular markets they’re interested in buying into. Some reoccurring markets offered by many of the brokerages in Singapore include the US, Malaysia, Australia, and Hong Kong stock markets.
Important: Beginner’s Stock Market Tip
The first tip you should know about the stock market is to only enter what you can afford to lose. For example, if you only have five thousand Singapore Dollars to your name, it would be advised not to enter all of that money into stocks or more specifically, all in one stock. Most importantly, do background research on the companies before investing in them. Check everything from articles, past stock quotes, and other forms of media. You can even consult a professional that specializes in the (SGX) or another market you are interested in.
Conclusion: How To Open Brokerage Account in Singapore
The (SGX) is a phenomenal opportunity to make money given the right guidance and counseling. Although there are some risks involved when investing in a Singapore market or one of another country, with astute tactics and proper planning you have the potential to make a lot.
Use all of the resources at your disposal from online articles, blogs, books and genuine advice from an experienced professional. Never cut yourself short and limit yourself. Tomorrow brings a new day for investment in the stock market, so plan today for action tomorrow. Invest in the (SGX) and play your cards wisely.
