I’ve been getting a lot of queries recently on the best stock brokers that I recommend for Singapore investors. It’s been more than a year since my previous article on the Best Stock Broker for Singapore Investors, so I figured this would be a perfect time to update the guide to best stock brokers for Singapore investors.
Basics: Best Stock Broker for Singapore Investors
Now the way I like to see Stock Brokers is as tools. And remember the saying: A bad workman blames his tools?
Having a good tool doesn’t necessary make you a good workman. But if you’re a good workman already, a good tool goes a long way to making life a lot easier.
In this article, I’ve evaluated the stock brokers based on the following factors:
There are 3 main types of fees to take into account:
- Stock Commissions – Stock Commission is basically the amount you pay on each trade. These are really important when you’re investing smaller amounts, but less important as the amount per trade goes up. The difference between paying 25USD per trade on a US stock (DBS Vickers) and 4USD per trade (Saxo) is the difference between a 2.5% fee and a 0.4% fee. So focus on this when you’re investing smaller amounts.
- Forex Spread – This one only matters for foreign shares, and only really comes into play if you’re investing big sums. To illustrate – the difference between a 50 bps spread and a 100 bps spread on a USD/SGD pair when you’re investing $1,000,000 is about $5000. That’s big. But when you’re investing $10,000, that’s only $50. So the bigger the sums you’re investing, the more you’ll prioritise good forex spreads over stock commissions.
- Custodian Fees – Custodian fees are when the broker charges you a certain fee each year to hold the shares. They’re either a fixed amount (eg. $2 per month per counter), or percentage based (0.1% per annum).
Ownership Structure (Custodian vs CDP/Legal Title)
This is the ownership structure of your shares. It’s either going to be cutodian (where the shares are held in the stock broker / bank’s name on trust for you) and CDP/legal title (where the shares are held in your name).
Practically speaking, for most retail investors, this is only relevant for Singapore shares. Which one you pick depends on the kind of investor you are, and we’ll touch on this in a bit.
For foreign shares, there isn’t a huge difference between the two. So I usually just go with the one with lower fees, which is custodian.
Ease of Use and Customer Service
This is a really underrated point. Everyone is obsessed over fees… until they open an account and simply can’t figure out how to make their stock trade… or when something goes wrong and they need to place a call to Hong Kong to speak to the customer service officer (not naming names, but you guys know who I’m referring to ;).
So in this review, I took ease of use, and customer service into account as well when evaluating stock brokers.
Reliability in the longer term
The thing about stock brokers is that you want them to work, reliably, forever. What you don’t want, is a stock broker that saves you a ton of money on fees, only to close operations the next day and force you to move all your shares out. Not only does that cost money, it’s also annoying as hell to deal with. Case in point – Charles Schwab recently closed its Singapore operations for good, forcing all existing customers to figure out what to do with their shares.
There’s no way of knowing for certain if a broker is here for good, but the bigger their existing base of customers (and the more they’re spending on customer acquisition), the more comfortable I would be.
Account Opening Bonus
Hey, call me a cheapo, but we’re Singaporeans, and there’s nothing we love more than a freebie on account opening right?
When you broker puts money in your hand to open an account (Saxo I’m looking at you, see details below for the Financial Horse x Saxo affiliate promo), that’s cash in your hands immediately. And cash in my hands is far superior to any rebates on stock trades down the road which may or may not materialise.
Money earned from an account opening bonus or referral program is no different from money earned from a stock trade, so it’s important not to neglect this factor too.
Quality of the Stock Broker and misc services
As a couple of readers have pointed out, some other factors to consider include:
- Quality of the human stock broker (including research reports that can be provided by the broker)
- Data – Real Time price streaming, market depth, price trigger & long validity, pre/close market trading, time/sale data etc
Not all investors will need these tools, so do also decide for yourself if these are important to you.
For me personally, as a millennial, I prefer my broker to simply do 1 task – buy shares, and buy them cheap, so these are less important to me. Not everyone is like me though, so if these services have value to you, then absolutely do try to maintain some money at a brokerage that can provide these services.
CDP vs Custodian
When you use a stock broker linked to your Central Depository (CDP) Account, all Singapore shares / REITs you buy go directly into your CDP account, and you are registered as the legal owner of the shares. The advantage is that because you’re the legal owner of the shares, the company knows who you are, and you get easy access to AGMs/EGMs, annual reports or circulars delivered to your home, timely receipt of other company notices etc.
With a custodian account, the stock broker owns the shares. So if you’re using a custodian service, the shares will be legally owned by the broker, and they hold the shares on trust for you. Advantages are usually lower fees.
Now the way I see it is this. If you’re a trader who takes short term positions in stocks (less than a year each time, typically a few months max), go with a custodian style broker. The lower fees will pay off in the longer run. If you’re a long term buy and hold investor like me, just do yourself a huge favour and pick a broker with a CDP service.
I’ve been at many AGMs where shareholders from a custodian service have huge trouble trying to get in, simply because the company didn’t have records of them being a legal shareholder. It’s also tricky when you’re trying to receive company notices (eg. Notice of EGM, Distribution Reinvestment Plans, general offers etc), because sometimes there’s a delay in your custodian broker sending these notices to you (sometimes you just don’t even get them). So yeah.. go with CDP, and you’ll thank me later.
Comparing the Best Stock Brokers
Dollars and Sense did up a nice table below that compiles all the brokerage fees in Singapore.
Buy and Hold Investor – DBS Vickers Cash Upfront
For CDP Accounts (buy and hold investors), use DBS Vickers Cash Upfront because the $10 minimum commission is the cheapest on the market.
The only drawback with DBS Vickers Cash Upfront is that you need to fund the money upfront before a trade rather than the usual T+2 settlement, but this doesn’t really bother me since I already have the money set asie anyway. Do also note that you can’t use DBS Vickers Cash Upfront on sell trades though, so the commission to sell is $25.
If you’re really concerned about fees, you can use DBS Vickers Cash Upfront to buy, and then use FSMOne to sell the shares from your CDP. Some readers have wrote in to share this “trick”, but I haven’t tried it myself personally, so I can’t comment on how much of an effort it is (Update: More readers have written in to comment, and it seems this is fairly straightforward to execute).
If you’re a buy and hold investor though, selling usually doesn’t happen too frequently, so I think this is worth the trade off to have CDP shares.
Day Trader – Saxo Markets
For Custodian Accounts (day traders), both Saxo Markets and FSMOne have 0.08% commissions and $10 minimum commission, which is the cheapest in the market.
Between the two, I would say go with Saxo Markets.
The advantage with Saxo is that they have an account opening bonus (check out the bottom of this article for full details of the Financial Horse affiliate/referral bonus), and they are far more established as a global player. Their platform is much easier to use than FSMOne (at least to me).
Do note also that Saxo’s custodian fee is waived for SGX stocks if you’re a Singapore Citizen/PR, so no need to worry about that!
By contrast, FSMOne doesn’t have a good referral bonus, the platform is less intuitive than Saxo, and they are not as established a global player as Saxo.
Saxo is a big Danish bank with a global presence, and they’ve been investing very heavily to expand and build their presence in Singapore recently. This sort of gives me the confidence they’re here to stay. FSMOne is a bit more of a niche, local player, but with their own core group of fans. So I’m not so sure where they will be in 10 years.
So yeah, I would say Saxo is a clear winner here.
US shares is where it gets complicated. There are 4 brokers that I would consider for US shares, and each has their own pros and cons. Which one works for you depends on the type of investor you are.
|Stockbroker||Saxo Markets||Interactive Brokers||Standard Chartered Online Trading||FSM One|
|Minimum Commission||$4.00||$1.00||$10 |
If you are Priority Banking ($200,000 or more AUM), there is no minimum commission.
|Custody Fee||0.06% – 0.12% per year (depending on your AUM) |
Based on 100,000 USD, this will be 120 USD a year. So 100,000 USD is the tipping point where it will make sense to move to Interactive Brokers.
|10 USD a month (US$120 a year) unless your AUM is more than $100,000 or commission is more than 10 USD a month||None.||None.|
|Sign up Promo||Referral bonus available.||None||None.||None.|
|Customer Service||Good.||No Singapore Office.||Usual bank level service.||Decent.|
The way I see it, is to pick your broker based on the amount you’re investing in US Shares (don’t count your Singapore shares here because those are held in CDP).
Less than US$100,000 – Saxo
When investing less than US$100,000 in US, I see Saxo as the best choice. With Saxo you get USD4 commission per trade (which is truly great), an account opening bonus, and decent forex spreads. The trading platform is nice and customer service is prompt (they have a Singapore office).
That’s about all you want from a broker really. There is the 0.12% AUM Fee to contend with, but to put it in perspective, on a US$10,000 investment it’s US$12 a year. You make that back many times over on the low commissions and account opening bonus. I was also told that at higher AUMs (approx $500,000 and up), Saxo can reduce/waive the custodian fee entirely, as well as provide you additional VIP services, so if you’re a high roller, that could also be one to look out for.
A lot of readers have written in with good things to say about Saxo, and I genuinely think this is the best broker for new to intermediate investors looking to dip into US Markets.
I do get a lot of queries asking why I don’t recommend Interactive Brokers at this tier, and my answer is this. With Interactive Brokers you pay an annual fee of 10 USD a month ($120 a year) unless your AUM is more than US$100,000. As a new to intermediate investor, most of your funds will be split between the Singapore and US market, with a heavy tilt towards Singapore. There’s no way the amount of foreign shares you hold will be anywhere near US$100,000 for it make sense to go with Interactive Brokers. Not only that, but Interactive Brokers’ platform is far more complex than Saxo, which makes it less conducive for beginner investors.
Note: If you’re planning to use Saxo purely for USD shares, you may want to consider setting up a USD denominated account. This minimises any forex fees when you sell USD shares (so you get USD instead of SGD when you sell, and don’t incur forex charges until you decide to withdraw the USD).
US$100,000 or more – Interactive Brokers
At this tier, I think that Interactive Brokers becomes a viable option.
When your account value crosses US$100,000, the minimum US$10 a month is waived, which makes it great for buy and hold investors. At this sums, the forex spreads and fees also come into play to make Interactive Brokers a good alternative.
What I hear from readers that write in though, is that the Interactive Brokers platform can be pretty tough to navigate, and customer service can be tricky because you need to contact the Hong Kong office (they don’t have a Singapore branch). But if you can bear through all of that, the fees are great. If you don’t want to deal with all the hassle though, check out Standard Chartered instead.
US$150,000 or more – Standard Chartered Online Trading
At this tier, I really like Standard Chartered Online Trading. You get Priority Banking Status once your total account value with the bank crosses $200,000 (US$150,000) which means no minimum commissions. I also hear that they’ve significantly reduced the forex spreads such that it’s now competitive with the other banks. There’s also a Singapore office if anything really goes wrong.
I still have some shares with them, and the platform annoys me though. But for no minimum commissions, I can probably bear with it.
What you are paying with the local brokers
For comparison though, just to illustrate how ludicrous some of the fees charged by the local brokers are, this is what is being charged by DBS Vickers for US shares.
Trading Fee: Minimum USD 25 or 0.18% of trading principal (whichever is higher)
Custodian Fee: SGD 2 per counter per month, capped at SGD 150.00 per quarter.
That’s insane compared to the USD4 for Saxo.
So yes, if you’re still using a DBS, OCBC, UOB or POEMs account to buy US shares, it really is time to switch to one of the above.
|Saxo Markets||0.15% (min. 90 HKD)||0.12% Annual|
|Standard Chartered Online Trading||0.25% Minimum $100 in HKD currency (HKD 107 with 7% GST)||None.|
|Interactive Brokers||0.08% of trade value(Min. HKD 18)||Minimum commission of 120 USD annually|
|FSM One||0.08% min HKD 50||None|
|DBS Vickers||0.18% on trading principal (min. HKD 100 for shares trading in HKD||Custody Fee SGD 2 per counter per month, capped at SGD 150.00 per quarter.|
|POEMS||0.25% (Min. 100 HKD)||SGD 2 per stock up to a max. of SGD 150 per quarter (7% GST applies) Monthly charges are automatically waived if there are at least (a) two trades in your trading account in the same calendar month, regardless of trade size in local or foreign shares OR (b) six trades in your trading account in the same calendar quarter, regardless of trade size in local or foreign shares OR (c) SGD 132 of paid brokerages in the same calendar quarter|
For Hong Kong Markets it really comes down to Saxo vs FSMOne for me. You can refer to the discussion above for picking between the two.
Note: Do note that you can now use Saxo to access China A shares at charges of 0.15% (min. CNH 40). This is incredibly competitive as the other broker with such access – Poems, charges 0.25% (min. CNH 88). If you’re looking to get access to China A shares, Saxo is probably the best option out there right now. Read more in our review here.
|Saxo Markets||0.10% (min. 8 GBP)||0.12% Annual|
|Standard Chartered Online Trading||0.25% (min. 10 GBP)||None.|
|Interactive Brokers||0.05% (min. GBP 1)||Minimum commission of 120 USD annually|
|DBS Vickers||Minimum GBP 25; or 0.35% of trading principal (whichever is higher)||SGD 2 per counter per month, capped at SGD 150.00 per quarter.|
|POEMS||0.4% (min. 25 GBP)||SGD 2 per stock up to a max. of SGD 150 per quarter (7% GST applies) Monthly charges are automatically waived if there are at least (a) two trades in your trading account in the same calendar month, regardless of trade size in local or foreign shares OR (b) six trades in your trading account in the same calendar quarter, regardless of trade size in local or foreign shares OR (c) SGD 132 of paid brokerages in the same calendar quarter|
For UK Markets it comes down to Standard Chartered Online Trading vs Saxo for me. Between the two, I think Standard Chartered wins out marginally because of no custodian fees, but it really is very close because Saxo has a lower stock commission (percentage wise and minimum fee wise).
I would say just go with the one that is easier for you. So if you already have a Saxo account, just use Saxo here. If you already have a Standard Chartered or Interactive Brokers account, just use that. And if you have an IB account or are able to hit the US$100,000 requirement, IB is probably the cheapest in terms of fees.
What is my recommended set-up?
If you’re a new investor, I know all this is a lot to take in. But if I had to do it all again, I would just open 2 brokerage accounts: DBS Vickers Cash Upfront for Singapore stocks, and Saxo Markets for foreign stocks.
Hand over my heart, I truly think that this combination is the most suitable for most retail investors out there.
The DBS Vickers Cash Upfront works for all Singapore investments you can possibly make, and is likely to remain so for the next 10 years unless DBS makes any big changes.
Saxo works for all foreign investments at least until you start hitting US$100,000 in foreign shares. Once you start hitting such numbers, you may want to start checking out Interactive Brokers (more than US$100,000), or Standard Chartered if you’re able to get priority banking status easily (more than S$200,000 or US$150,000).
I’ve summarized it into the table below:
|Buy and Hold Investor (<US$100,000)||Investing Large Sums (>US$100,000)||Day Trader|
|Singapore Stocks||DBS Vickers Cash Upfront||DBS Vickers Cash Upfront||Saxo|
|Foreign Stocks (US/HK/UK)||Saxo||Interactive Brokers (>US$100,000 in foreign stocks) or Standard Chartered Bank (>$200,000)||Saxo|
What is the Financial Horse Set Up?
And just to show that I’m putting my money where my mouth is, here is how I do it:
I use DBS Vickers Cash Upfront for all my Singapore shares and REITs. I’m a buy and hold investor, and I really like having shares go into my CDP for the long haul.
For foreign investments (US and Hong Kong), I use Saxo Markets. I really like USD4 minimum commissions, the Saxo platform platform, and the account opening bonus (details below).
I have some US Shares held via Standard Chartered Online Trading back from the good old days when they didn’t charge minimum commissions. Those stay there because it’s too much hassle / fees to move them over to Saxo Markets.
I currently don’t hold UK shares, but if I did, it would probably be either Standard Chartered Online Trading or Saxo Markets.
If you’re keen on opening a Saxo account, Financial Horse has partnered with Saxo for a special account opening bonus if you fund $3000 and make 1 stock trade. The link is below, drop me an email at [email protected] for the next steps!
Note: If you’re interested in this bonus, please do make sure you click through the link to open an account!
Referral Link: FH Account Opening Bonus.
Picking the best stock broker for you is always important because every dollar of transaction cost saved, is effectively a dollar worth of investment returns.
But which brokerage you ultimately pick depends greatly on what kind of investor you are, and your existing situation. For example, if you have a Saxo Markets account and want to buy UK shares, it may not really be worth the hassle to open a Standard Chartered account just to save a little on fees. Or if you’re a priority banking customer with Standard Chartered, it makes a lot of sense to just use them for all of your shares. Or if you can maintain USD 100,000 with Interactive Brokers, they’re probably the best fit for you.
But for the average investor who has his net worth spread over real estate, cash, bonds, and other alternative investments, I think the above recommendations work decently well. Of course, don’t take my word for it, think through what works for you, what you plan to invest in in the coming years, and do some independent research, before picking a broker.
But at the end of the day, don’t overthink. Remember, it’s just a broker, not a wife. If you pick wrongly, you can always switch later ;).
What do you think? Share your comments below!
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