The Weekly Horse: Replacing Standard Chartered Online Trading with Saxo Markets (Half year update)

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I’ve been a massive fan of Standard Chartered Online Trading ever since they opened with their no minimum commission rule. Those were the glory days of stock trading, where Singapore had its very own answer to the Robin Hood App, by Standard Chartered no less! I remember taking up US$500 positions in tech stocks and flipping them at a profit a week after, all for a commission of US$1. The day that Standard Chartered removed the no minimum commission rule (and imposed a US$10 minimum commission) was a dark day indeed.

Earlier this year, I wrote an article about how I replaced Standard Chartered Online Trading with Saxo for my US trades, and DBS Vickers Cash Upfront for my Singapore Trades. I was quite taken aback by the popularity of the article, with many readers commenting or reaching out to me personally to share their experiences. It’s been half a year since I first opened the Saxo account, so I wanted to pen an update to share my experiences with Saxo thus far. I’ve replicated the pros and cons of Saxo from my original article below, and I’ll comment on each individually. For ease of reference, I’ve also tabulated the fee schedule for the comparable brokers below:

Benefits of Saxo

USD3.99 minimum commission – Actually by far the largest advantage is the lower fees. The rest are icing on the cake.

Comparable pricing available on websites of respective brokers (as of 7 June 2018)

Financial Horse Update: This remains absolutely correct, and is by far the main reason I use Saxo. A US$10 minimum commission on Standard Chartered Online Trading is far too high for me personally, and US$3.99, while not perfect, is still far more manageable.

A number of readers suggested trying to get priority banking status with Standard Chartered, as that would allow you to enjoy no minimum commission trading. This requires S$200,000 in deposits/investments with them, or a minimum of S$1.5 million in housing loans. The first criteria is actually pretty achievable if you decide to pool all your investments and deposits in Standard Chartered. Personally for me though, I find it too much of a hassle just to enjoy the minimum commission trading. I enjoy using DBS Multiplier and UOB One accounts for the higher interest rates, and I cannot stand using Standard Chartered to hold my Singapore shares (they are nominee, not CDP based) due to problems when it comes to attending AGMs, or dealing with corporate actions such as rights issues, or even small things like receiving circulars.

The other option, again suggested by many other readers, is Interactive Brokers. The base trading fees are ridiculously good, as are the forex rates, but the main problem is a US$10 minimum commission a month. If you are a frequent trader that makes 10 or more trades a month, Interactive Brokers is by far the best option. Personally I am not a trader, I prefer to take longer term positions, so there is no way I make 10 trades a month. For this reason Interactive Brokers is not suitable for me.

Trading platform that does not suck – Fellow users of Standard Chartered who have been with them from the start will get this. Standard Chartered’s online platform and app really sucks, and the only reason why we put up with them is for no minimum commission trading. On the bright side, Saxo has a very decent online trading platform, and an app that actually works.

Financial Horse Update: Standard Chartered has completely revamped their online trading platform. The new platform no longer sucks, and it irritates me a lot less these days. But am I willing to pay a minimum US$10 per trade just for the fancy new platform? Absolutely not. Any information that I need from a stock I can easily get via Google or Yahoo Finance, and in any case, the Saxo Account provides me a ton of stock and chart information if I ever need to use it.

Much better forex spreads – The last I checked, Standard Chartered imposes about a 100bp spread on the forex, which is frankly ridiculous. Whatever you saved on the commission might actually go into the forex spread, depending on how frequently you trade. Saxo has a better 50bp spread. This is still high when compared to DBS Vickers, but you do save quite significantly on the minimum commission and custodian fee when compared to DBS Vickers.

Financial Horse Update: This still remains true. DBS Vickers basically uses the spot FX rates, so they are by far the best. Standard Chartered is the worst here, so Saxo is in a middle ground between Standard Chartered and DBS Vickers. To me I find the DBS Vickers fees prohibitively expensive (US$25 minimum per trade, US$2 per counter per month), so it’s a huge no-no for me.

Decent stock information – I’m not a technical trader, I buy and hold for extended periods. When I evaluate a broker, all I want is to be able to buy and sell a share, on the cheap. That being said, Saxo does have a wealth of technical information and analyst reports, if you are into that sort of stuff. There’s a very comprehensive review here on all the technical features of Saxo.

Financial Horse Update: I really don’t use any of the fancy features, but it’s there as an option if you ever need it.

Problems with Saxo

Nominee account – Don’t forget that Saxo is a nominee account, and the shares are held in Saxo’s name. Saxo is a large bank and I don’t see them ever collapsing, but in the unlikely event they do, it may take some time and hassle before you get your shares back.

Financial Horse Update: It’s still a nominee account, which is not the best. I think it’s worth the lower fees, and in any case its similar to what Standard Chartered does. If this truly bothers you, you’ll need to go with something like DBS Vickers, where they hold the stocks in your name, but they charge you hefty fees.

Custodian Fee – Just to update after confirming with Saxo again. Saxo does impose a 0.12% AUM fee for non-Singapore Shares. This is a bit annoying because on a 50,000 USD portfolio, it adds up to about 60 USD yearly. To contrast with the other brokers: Interactive Brokers has a minimum requirement of 10 USD commission a month, totalling 120 USD a year, while DBS Vickers imposes a S$2 fee per month per counter, so thats S$24 per counter per year. Standard Chartered has no custodian fee, but 10 USD minimum commission per trade, and quite poor forex spreads. I guess the way to see it is this, if you only intend to buy 2 or 3 counters at one go and hold long term without trading, DBS Vickers might be helpful. If you have quite a large AUM or trade very frequently, Interactive Brokers is worth checking out.

Financial Horse Update: I’ve summarised this it in the table below. Based on my monthly statement accounts, I can confirm that there is indeed a 0.12% custody fee, but there is no minimum custody fee. To put this in perspective, with a S$10,000 stock portfolio, that’s about 12 dollars a year, or 1 dollar a month. If you use the Saxo referral bonus, that can help you offset quite a lot of custody fees upfront.

The equation changes somewhat if you have US$100,000 plus in US stocks in Saxo. The custody fee then becomes U0S$120 a year, or US$10 a month. Once you’re hitting such levels, you may want to consider using Interactive Brokers (you pay the minimum US$10 commission every month instead of a custody fee, and basically take it that all trades are free), or you can move it over to Standard Chartered and top up a small amount in deposits to enjoy priority banking status. I don’t think I’m at that level yet, so I’ll continue using Saxo for now.

The Weekly Horse

All Financial Horse does in his free time during the week is read financial news. With this new initiative (“The Weekly Horse”), hopefully some good can come out of it. During the week, I post articles that I enjoyed on the Facebook Group (do join if you want a sneak peak), and every Sunday I will collate the links for readers. I also take the opportunity to address queries from readers, or share any thoughts that I have for the week. If you enjoyed this post, do share your thoughts in the comments below!

Basic but important lessons. Strangely, my favourite quote was this:

In this unexpected outcome there is an important lesson that even Hetty never learned—no matter how you much money you acquire in life, you can’t take it with you. No matter how hard how you work, no matter how much you save, one day it will all end. As one of my favorite speeches about getting rich concludes, “It all goes back in the box.”

https://ofdollarsanddata.com/4-lessons-from-the-richest-woman-in-wall-street-history/

Really enjoyed this article that examines the impact a yield curve inversion will have on the psychology of other investors.

Indeed, the smart researchers at Variant Perception have illustrated a number of points in a recent blog article that should give us pause. First, they note that while an inverted yield curve has preceded the last eight U.S. recessions, it failed to flag the five prior to those. Even more interestingly, in my opinion, the Variant Perception team found that the Japanese government bond yield curve has not inverted prior to any recessions in their zero interest rate epoch (after 1991). They also note that false positives have been triggered in other international markets, such as in the U.K. and Canada. Thus, we have (again, in my opinion) some strong counterarguments to the reliability of a yield curve inversion as a recession indicator for the U.S. in a near-zero interest rate policy regime.

https://integratinginvestor.com/playing-for-a-potential-yield-curve-inversion/

Shared by a reader:

My First thought was-Why the UK?? Why not EU- especially Germany/Netherlands. The Brexit negotiation is still at deadlock and with the much bigger sized EU not making it easy for UK ( And the ‘stable Genuis ‘ Trump appearing lukewarm on US support for the UK… because they did not follow his advise on how to negotiate the exit with the EU? ). I read 40% of UK export goes to EU? Surely this may be reduced and hit their GDP when they separate, aggravated by the stricter border controls that will reduce the efficiency ad volume of logistic flows. Already forbes reported that 2/3 of EU business that work with suppliers in the UK are expected to move part of their supply chain out of UK.  Instead of the UK, others like Fraser logistic is moving onto continental Europe ( Germany and Netherland) and Mapletree too I gathered ( in the recent MLT AGM earlier this mth, somebody asked after the meeting, why they not also expanding into Europe logistic hub to create presence on both sides of the china’s One road one belt initiative, having already established a foothold on the china side. They say the sponsor is indeed working something in Europe. So lets see if they venture out of their pan-asian focus in near future with asset injection into MLT). Since the brexit referendum in 2016, logistic rental is on uptrend (good as I read residential demand compete with industrial use. Weak pound led to inflow of fund into residential real estate to hit all time high last summer.. but have since ease off) but exchange rate as fallen sharply (good as it makes the asset they buying cheaper. But If it continues for next few years, its bad….). When the UK finally leave the EU in March 2019, then we know if the bet will pay off…For those who are vested, stay tune!

https://www.theedgesingapore.com/ascendas-reit-acquire-portfolio-12-uk-logistics-properties-373-mil

It’s starting to look like a race to the bottom in asset management, with the launch of the new zero expense ratio index funds.

https://www.marketwatch.com/story/fund-fees-hit-milestone-as-fidelity-announces-products-charging-0-2018-08-01

Interesting article on how people who suddenly win a jackpot more often than not end up bankrupt. There’s an important lesson to be learnt here, but i can’t quite pin it down…

https://www.wealthmanagement.com/high-net-worth/how-not-invest-lottery-jackpot

The end of the global housing boom?

https://www.bloomberg.com/news/articles/2018-07-31/are-house-prices-falling-from-sydney-to-new-york

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