Trading fees are part of the cost paid to your broker when you trade. These fees differ within the type of products you trade, the trading size, and market access. The amount paid is important because they should be included as the cost of investment. In return, it will affect the total returns you make.
These fees are typically charged on the stock sales and purchases. Additional fees can also include exchange fees, CDP clearing fees and goods and services tax.
From our research, most brokers in Singapore charge a minimum commission of S$25 to S$28 of fee for transactions below S$50,000. Only SAXO charges a substantially lower commission rate of 0.12% on your trades, with a minimum cost of S$15. However, the downside is that your stocks are stored in a custodian account instead of the CDP.
Type of Brokers
Most brokers in Singapore are full-service brokers. They provide a range of comprehensive services required to support your trading needs. These include funding services, platform demos, stocks research and broker-assisted trades. Some examples are Phillip Securities and DBS Vickers.
Another type of brokers is online brokers which are usually foreigners. These brokerages typically do not have local offices. This proves to be a problem for those new to trading. Customer service may be lacking due to the difference in time zones. Additionally, funding your account may be less straightforward compared to a local broker.
However, they make up for this by offering much lower fees. We’ve prepared a list of best online brokers in Singapore (both local and international) so you can pick the one that most suits your needs.
Singapore’s stocks market may be too small for some investors. Perhaps, they even consider it less exciting because it is not volatile enough. While most stock brokers here will allow you access to trade Singapore stocks, not everyone can give you access to other markets. This is especially true if you are looking at markets from emerging countries.
You may also want to explore other product classes. These are contracts for difference (CFDs), Exchange-traded funds(ETFs) or futures; which would like to use the same broker for this purpose. It is safer to check if the broker allows you access to these various asset classes as well before you open an account with them. You can check out market-access allowed by each broker in Singapore here.
Unless you are too busy, most people these days usually execute their trades themselves online. If you are one of them, having a user-friendly trading platform is extremely important.
Other than that, more advanced traders may want to subscribe to more sophisticated platforms. Platforms that give them more functions, such as interactive charting functions, and various technical indicators. As such, it is wise to request for a platform demo or subscribe to a free trial before opening an account.
Banks or Brokerages
The broking business in Singapore has seen banks jumping in to take up a substantial market share from traditional stock brokers. It is no longer uncommon to find banks offering broker services to retail investors – DBS Vickers, iOCBC and Maybank Kim Eng are some familiar examples.
One of the advantages of opening a stocks trading account with a bank is that you can transfer money more easily from your bank account to fund your trading account.
However, the efficient banking system here also means most brokerages allow you to transfer funds from your bank account to your trading account, so this counts as a small factor.
Look Beyond Trading Fees
Since the trading fees offered by most local stockbrokers are rather competitive, choosing one based on fees itself may seem like a trivial concern. However, minimizing trading fees can be influential to your returns over a long period, especially if you trade frequently. Also, you should consider the other factors mentioned above, especially the access to overseas markets and the ease of use of the trading platforms to ensure you can trade the way you want.