If you are a foreign investor looking to take advantage of the great investment opportunities in Singapore. the first thing that you must look into is how to open a brokerage account in Singapore. Having your own brokerage account will allow you to invest in Asian markets easily and at a low cost, while still doing business in a familiar language and tied with reputable firms in a highly sophisticated financial hub.
Opening a Singaporean brokerage account is a simple and straightforward process. Almost all stock brokers operating in Singapore warmly welcome foreign clients, no matter the size of legal form. In Singapore, there is no need to invest tens and thousands of dollars to get started. If you are a foreign investor looking to start your investment journey in Asia to ensure proper wealth management, here are the steps in opening a financial brokerage account in Singapore.
Singapore Central Depositary Account (CDP) Vs Nominee Account
As an investor, you are probably familiar with the primary function of a brokerage account.
A brokerage account will allow you to trade shares through your chosen brokerage firm. Your central depositary account (CDP) is where all your purchase sales from the local stock market (Singapore Stock Exchange- SGX) are stored.
In Singapore, your central depository account (CDP) will be directly held by you, the investor. Technically, you are the direct owner of your purchased sales. Being the direct owner offers a host of advantages, including voting rights, rights to attend annual general meetings, and many more. You can have more than one brokerage account with the same brokerage firm in Singapore. But before you get to this step, you must first open a central depository account (CDP).
Another option to invest in the Singapore Stock Exchange (SGX) is to open have your shares be held by a custodian account organized by your brokerage firm. In this set up, shares will be bought under your brokerage’s name and then placed under a nominee account assigned to you.
Brokerage Fees in Singapore
When choosing among Singapore brokerage companies, you will observe that some firms charge more or less the same commission fees. Perform due diligence when choosing a brokerage firm to partner with in Singapore.
Additionally, you may also notice that there are a few exceptions. Some firms charge much lower commission fees. Some brokerage firms even charge less than $25 on commission fees. The primary reason for these low commission rates is that they hold your stocks in nominee accounts instead of a central depository account, a less popular option among local investors.
Extent of Market Access
If you are looking to invest not only in the Singapore Stock Exchange (SGX) but in other foreign markets, including Hong Kong, Thailand, Indonesia, Malaysia, and the United States, you must then check if your prospective brokerages can provide you easy access to your desired markets.
Foreign shares will not be held in your central depository account (CDP), but instead they will be held in a nominee account with your brokerage firm.
Singaporean brokerages charge $2 per month per counter for foreign stocks.
Available Investment Products
Apart from local and foreign market access, you must also consider the types of investment products available to foreign investors. Some brokerages also offer access to ETFs, bonds, options, futures, unit trusts, CFDs, and more. You may want to consider the access to these products. However, if you are a beginner investor, it may be best to stay away from other investment products, but instead stick with bonds, stocks, and certain EFTs.
Reputation
When choosing a brokerage, reputation is an important factor. The last thing you need is to get caught in a situation where a brokerage goes bankrupt when you have thousands, or even millions of dollars’ worth of hard-earned money held with them. Even when your stocks are protected in a central depository account or nominee account, things can still get messy.
Before entrusting your money, it’s important to check a prospective brokerage’s history and track record. The good news is that Singapore Stock Exchange retail brokerages are strictly regulated by the Monetary Authority of Singapore (MAS).
How to Open a Brokerage Account in Singapore
Step 1- Open a Central Depository Account
You must be at least 18 years old to open a Singaporean bank account with your chosen bank.
You may also apply for your central depository account online through the Singapore Stock Exchange. The website offers hassle-free process, so you won’t have a hard time opening one in Singapore. If you prefer the traditional way of opening a brokerage account, simply down the application form, and include all required documents. Once documentation is complete, you may send it to the Central Depository Pte. Limited.
On the other hand, if you choose to hold your assets in a nominee account, you can skip Step 1.
Step 2- Select a brokerage and open an account
There are two ways to open a brokerage account in Singapore:
- Open an account online
- Download and fill out an application form.
- Include all supporting documents.
- Mail to your preferred brokerage’s mailing address.
- In-person application
- In case you need guidance in filling out forms, it is best to visit the brokerage head office.
- A representative will help you throughout the account opening process.
- You can get assistance in opening a central depositary account if you have not completed this process.
Opening a brokerage account in Singapore is only the first step in your journey of investing in Singapore. Damalion offers expert investment consulting for investors looking to expand their portfolio in Singapore and other financial hubs across the globe. We have an extensive global service network consisting of service providers, ensuring investment transactions are completed smoothly and with zero hassle. We have the knowledge and skills to process crucial investment transactions, including opening a brokerage account, opening a corporate bank account, Singapore company formation, and more. If you wish to learn more, reach out to a Damalion expert today.
This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.
