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Like many of you investors out there, I was a huge fan of Standard Chartered Online Trading when it first opened. No minimum commission on stock trades, on any stock exchange in the world? Sign me up please!
In my early days as an investor, I placed almost all my US and Singapore stock trades on Standard Chartered. The no minimum commission allowed me to purchase S$1000 to S$500 worth of stock each time, and pay S$1 or S$2 in fees. Those were the golden days of stock trading.
Eventually Standard Chartered probably figured out that this wasn’t making them enough money, or perhaps this was their plan all along once they had a large enough user base, and they imposed a minimum commission of US$10 (or $10 of the local currency).
This really destroyed the entire purpose of having a Standard Chartered Account for me. They had horrible forex spreads (almost 100 bps), and a horrible trading interface that we all put up with because hey, no minimum commission right? I’ve been on the hunt for a replacement broker ever since.
Updated stockbrokers for 2020 here.
For Singapore shares, I have replaced them with DBS Vickers Cash Upfront. The minimum commission is far superior: minimum S$10 per trade, with a S$5 dollar rebate.
Not only that, but DBS Vickers doesn’t use a nominee account structure like Standard Chartered. The Singapore shares that you buy go directly into your CDP account. This means you are the legal owner of the shares, and can receive documentation from the company (rights issue/preferential offering circulars etc), as well as attend the AGM without having to be appointed as a proxy. I personally have seen many fellow Standard Chartered users encounter problems when trying to get into an AGM, simply because the shares are legally held in the bank’s name.
To be able to get shares in your CDP account for S$5 minimum commission is an absolute steal, and there’s really no reason why you should not be making use of this feature. The trading platform is pretty decent as well.
Note: Seedly has a nice article on the pros and cons of a CDP vs nominee account, do check it out if you need more info
For US Shares, I’ve still been tolerating Standard Chartered until now. But no more. One of my friends recently referred me to Saxo online trading, which offers a minimum USD 4 commission. You can take a look at the full rates here, it’s significantly better than what is offered by any other broker out there.
Comparison against other brokers
Table shows minimum commissions. Comparable pricing available on websites of respective brokers (as of 11 Jan 2018)
Benefits of Saxo
USD 4 minimum commission – Actually by far the largest advantage is the lower fees. The rest are icing on the cake.
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.
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.
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.
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.
The way I see it, a brokerage is just a tool, much like how I would use Gmail. Sure, Yahoo Mail may have more features and a fancy user interface, but at the end of the day, I am here to get a job done, wheether that is to send email or buy a stock. I don’t really care much for the other features. As Singaporeans, hunting for bargains is in our DNA, and I really don’t see any reason to pay higher commissions over at DBS Vickers or UOB Kay Hian just to buy a US stock.
Note: A couple of readers reached out to me with great questions, and I thought I would add some clarifications here:
1. DBS Vickers Cash Upfront does not apply to the sale of shares, on which minimum commission is still S$25. A reader suggested the use of FSMOne for sale of shares, which has S$10 minimum commission. I haven’t explored this option fully yet, so I shall reserve my comment until I have more time to look at the documentation.
2. Interactive Brokers offers a great commission at USD1 per 100 shares. However, the minimum monthly trading requirements are very high (more than 100,000 USD in equity or more than 10 USD in commissions and fees, on a monthly basis), that we as retail investors are unlikely to hit regularly, which is why I felt it was less appropriate.
3. Just to update after confirming with Saxo again. Saxo does impose a 0.12% AUM fee. 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.
Personally for me I will leave all my existing US and Singapore shares with Standard Chartered, because the transaction costs associated with moving them all to another broker is not worth the upside. For new investments, I will continue to go with Saxo because the referral bonus is already sufficient to cover the AUM fee. I also don’t trade on a frequent basis and I don’t see myself hitting 10 USD commission a month to really make use of Interactive Brokers. Because most of my shares are already with Standard Chartered, my AUM with Saxo (US shares only, all new money into Singapore shares I invest via DBS Vickers) should not cross the S$100,000 threshold in the near future, so the AUM fee will not get out of hand. I don’t like DBS Vickers because the USD25 minimum commission is very high, and makes it hard to dollar cost average in with smaller sums.
Of course, ultimately which broker is appropriate for you will depend on your personal situation, and what works for me may not work as well for you. Thanks very much for the input from everyone, and apologies for not catching this point earlier.
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