If you are an active trader, you would know that choosing the right broker is half the battle won. Not only do high commission fees eat into any potential profits, having a trading platform that is not user-friendly can also cause lots of frustration or trading mistakes. Here's a look at some factors you should consider when choosing a stock brokerage in Singapore.
Trading fees are part of the cost paid to your broker when you trade. These fees can differ with regards to the type of products you trade, the trading size, as well as the market access. The amount of fees paid is important because they should be included as the cost of investment and will affect the total returns you make. Do bear in mind that these fees are typically charged on both the purchase and sale of your stocks. Other than brokerage fees, other additional fees can include exchange fees, CDP clearing fees as well as goods and services tax.
From our research, most brokers in Singapore charge a minimum commission of S$25 to S$28 of fee for transactions below S$50,000. Only SAXO charges a substantially lower commission rate of 0.12% on your trades, with a minimum cost of S$15. But the downside is that your stocks are stored in a custodian account instead of the CDP.
Type of Brokers
Most brokers in Singapore are full-service brokers, providing a range of comprehensive services required to support your trading needs. These include account opening at their local offices, funding services, platform demos, stocks research and broker-assisted trades. Familiar names like Phillip Securities and DBS Vickers are some examples of full-service brokers.
Another type of brokers here are online brokers which are usually international or foreign brokers. These brokerages may not have a local office which can present some problems for those new to trading. Customer service may be lacking as they might be situated in a different timezone and funding your account may be less straight-forward compared to a local broker. However, they make up for this by offering much lower fees. We've prepared a list of best online brokers in Singapore (both local and international) so you can pick the one that most suits your needs..
Singapore's stocks market may be too small for some investors, or perhaps they consider it less exciting because it is not volatile enough. While most stock brokers here will allow you access to trade Singapore stocks, not everyone can give you access to other markets. This is especially true if you are looking at markets from emerging countries.
You may also want to explore other product classes, such as contracts for difference (CFDs), Exchange-traded funds(ETFs) or futures and would like to use the same broker for this purpose. It may also be worthwhile to check if the broker allows you access to these various asset classes as well before you open an account with them. You can check out market-access allowed by each brokers in Singapore here.
Unless you are too busy, most people these days usually execute their trades themselves online instead of calling in to get their brokers to do it for them. If you belong to this group, having a user-friendly trading platform is extremely important.
Other than that, more advanced traders may want to subscribe to more sophisticated platforms that give them more functions, such as interactive charting functions, access to historical pricing and various technical indicators. As such, it is wise to request for a platform demo or subscribe to a free trial before you open an account.
Banks or Brokerages
The broking business in Singapore has seen banks jumping in to take up a substantial market share from traditional stock brokers. It is no longer uncommon to find banks offering broking services to retail investors – DBS Vickers, iOCBC and Maybank Kim Eng are some familiar examples.
One of the advantages of opening a stocks trading account with a bank is that you can transfer money more easily from your bank account to fund your trading account. However, the efficient banking system here also means most brokerages allow you to transfer funds from your bank account to your trading account, so this counts as a small factor.
Look Beyond Trading Fees
Since the trading fees offered by most local stock brokers are rather competitive, choosing one based on fees itself may seem like a trivial concern. However, minimizing trading fees can be influential to your returns over a long period, especially if you trade frequently. Also, you should consider the other factors mentioned above, especially the access to overseas markets and the ease of use of the trading platforms to ensure you can trade the way you want.
Written by Lynette Tan