Singapore Online Trading Brokers Guide

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3 days ago
5 min read

Singapore Online Trading Brokers Guide

For anyone looking to engage in online trading in Singapore, there is a wide array of brokerage firms and platforms to choose from, catering to different needs, from beginner investors to seasoned traders. Here is a breakdown of some of the key online trading brokers in Singapore and what they offer:

Popular Online Trading Platforms

Interactive Brokers (IBKR): A well-known global platform that offers access to a wide range of markets and assets, including stocks, options, futures, and forex. It is often favored by advanced traders due to its sophisticated tools, competitive fees, and institutional-grade trading platform.
Moomoo Singapore: A popular platform with a user-friendly interface that appeals to a wide range of investors, including beginners. It is known for its competitive fees and offers access to US, Hong Kong, and Singapore stock markets. Moomoo also provides real-time market data and a community for social trading.
Webull Singapore: This platform is particularly popular with younger, mobile-first investors. It is known for its $0 commission on US stocks and ETFs, a powerful and sleek mobile app, and in-depth charting tools.
Tiger Brokers: Another broker gaining popularity in Singapore, it offers a beginner-friendly interface and competitive commission rates. It provides access to major global markets like the US, SG, and HK, and supports features like fractional shares.
Saxo Markets: A well-established broker in Singapore offering a comprehensive suite for multi-asset trading. It provides access to a large number of instruments, including stocks, ETFs, and CFDs, and has professional-grade platforms.

Key Factors to Consider When Choosing a Broker

Fees and Commissions: This is a crucial factor, especially for frequent traders. Fees can vary widely between brokers and can include minimum fees, commissions per trade, and platform fees. Some platforms offer $0 commission for certain markets (like US stocks), but may have other associated fees.
Account Types: There are two main types of accounts for trading on the Singapore Exchange (SGX):
- Custodian Account: The shares are held by the brokerage firm in a nominee account. This is common with newer, low-cost online brokers.
- CDP-Linked Account: Your trades are directly linked to your personal Central Depository (CDP) account. This is a common setup with traditional local brokers.
Available Markets and Products: Consider which markets and asset classes you want to trade. Most brokers offer access to SGX, US, and HK markets, but some also provide access to a wider range of international exchanges and products like options, futures, and forex.
Platform and User Experience: The platform's interface, tools, and features are important for a seamless trading experience. Many brokers offer mobile apps, desktop platforms, and web-based platforms, each with different functionalities.
Regulation: Ensure that the broker is regulated by the Monetary Authority of Singapore (MAS) to protect your investments.

Additional Local Brokerages

DBS Vickers: The brokerage arm of DBS Bank, it is a traditional option that offers both online trading and CDP-linked accounts.
Phillip Securities (POEMS): A long-standing local brokerage firm that provides a wide range of investment products and services, including access to multiple global markets.
CGS-CIMB Securities: A joint venture that offers various trading services and products, including its digital platform, ProsperUs.
UOB Kay Hian: The brokerage arm of UOB, providing access to different markets and investment products.
Standard Chartered Online Trading: Offers access to a range of global exchanges with competitive brokerage rates.

Fees and Commissions

Understanding brokerage fees and commissions is crucial for any investor, as these costs can significantly impact your overall returns. While many brokers now advertise "commission-free" trading, a closer look reveals a complex landscape of different fee structures. Here's a breakdown of the common types of fees you'll encounter and how they work.

1. Trading Commissions

This is the most direct cost of a transaction. A commission is a fee a broker charges to execute a trade on your behalf.

Flat Fees: Some brokers charge a fixed amount per trade, regardless of the size of the transaction. For example, a broker might charge $5 per stock trade. This model can be beneficial for those who trade larger volumes but less so for small-scale, frequent traders.
Percentage-Based Fees: The commission is calculated as a percentage of the total value of the trade. For instance, a broker might charge 0.1% of the trade value. This is common in certain markets or for specific asset classes. Many Singapore-based brokers, for instance, have a tiered structure where the percentage decreases as your trade value increases.
Minimum Commissions: Many brokers, especially traditional ones, have a minimum commission. This means you will pay a flat fee (e.g., S10orS25) even if the percentage-based commission on your small trade would be lower. This can make frequent, small trades very expensive.

2. "Zero Commission" and How Brokers Make Money

The rise of online trading platforms has led to a race to the bottom on commissions for stocks and ETFs. While many platforms advertise "zero-commission" trading, they still need to generate revenue. They do this in several ways:

Payment for Order Flow: Brokers may route your trades to market makers, who pay the broker for the right to execute those trades. This is a common practice in the U.S. and can be a significant source of revenue for these firms.
Spreads: In forex or CFD (Contracts for Difference) trading, brokers often make money on the "spread," which is the difference between the bid (buy) and ask (sell) price of a security. They widen this spread to take a small cut on every trade.
Margin Lending: If you borrow money from the broker to trade on margin, they will charge you interest on the loan.
Account Fees: Some "commission-free" brokers may charge other types of fees to compensate, such as inactivity fees or fees for premium services.

3. Other Common Fees

Beyond commissions, you may encounter a range of other fees:

Platform or Custody Fees: Some brokers charge a recurring fee (monthly or annually) for the use of their trading platform, access to real-time data, or for holding and safeguarding your assets in a custody account.
Inactivity Fees: This fee is charged if you do not make a certain number of trades or maintain a minimum account balance over a specified period.
Account Maintenance Fees: Annual or monthly fees for the administrative upkeep of your account.
Transfer Fees: If you decide to close your account or transfer your assets to another brokerage, there is often a fee for this service.
Currency Conversion Fees: When you trade in a foreign market, you'll need to convert your local currency. The broker may charge a fee or a less favorable exchange rate.
Exchange and Regulatory Fees: These are small fees passed on from the exchange or regulatory bodies, such as clearing fees, trading fees, and Goods and Services Tax (GST) in Singapore.

How to Minimize Fees

Choose the Right Broker: Compare fee structures across different brokers based on your trading frequency and asset classes you plan to trade. If you're a long-term investor, a broker with low or no custody fees might be ideal. If you're an active trader, a tiered pricing model with volume discounts could save you money.
Bundle Your Trades: If a broker has a minimum commission, it's often more cost-effective to save up and make larger, less frequent trades to avoid paying the minimum fee multiple times.
Read the Fine Print: Always check the full fee schedule and terms and conditions of a brokerage account before you open one. This will give you a complete picture of all potential costs.