How to Choose Your First Broker: Singapore Brokerage Comparison

Man on his broker

You’ve finally decided to start investing, but where do you even start? How do you buy shares?

Well, you need a broker for that!

“Oh? What’s a broker? And how do I choose my first broker?”

What is a Broker?

A broker is an intermediary between the investor (you) and the exchange which the shares are listed on. In the past, investors would have to contact a person, which would also be known as a broker, to place their buy and sell orders. Thankfully, we can now do  all of that online. Bless the internet!

Types of Brokers

In Singapore, there are two main types of brokers:

Central Depository (CDP): The Central Depository (CDP) is a place run by the Singapore Exchange (SGX)  for Singaporean investors to keep their shares that they bought from the SGX. Note that CDP accounts can only hold SGX stocks and not foreign stocks.

Custodian: Custodian accounts hold the shares within the broker. This means that technically the shares are not under your own name, but legally, they are your property and the brokers do not have access to them.

In general, Custodian accounts tend to have lower fees as compared to their CDP counterparts. Also, if you’re looking to buy stocks outside of Singapore, you will need a broker that has a  Custodian option as CDP accounts are unable to hold foreign shares.

“Lower fees, you say? How much lower?”

Trading Commissions Comparison

Everyone knows costs are important when it comes to investing. After all, 0.2% in commissions will cost you almost $20 on an investment of $10,000. This is made worse if you don’t break the minimum commissions. Taking an example, a fresh grad, Aaron, can only invest $1,000 at one go. No problem, better to start small than don’t start at all. But even though the broker charges 0.2% commissions, there is a minimum commission of $10. This brings the actual commission charged to 1% of the investment. Fret not, there are brokers with lower commissions than that! Let us compare some popular brokers in the market now:

For SGX Trades

Broker Type Trading Comm. Min. Comm.
DBS Vickers
CDP
0.28%/0.12% *
SGD 25/10 *
OCBC Securities
CDP
0.275%
SGD 25
FSMOne
Custodian
0.08%
SGD 10
Standard Chartered
Custodian
0.20%
SGD 10
SAXO
Custodian
0.08%
SGD 0 **
TD Ameritrade
-
-
-
Interactive Brokers
Custodian
0.08%
SGD 2.50
Tiger Brokers
Custodian
0.08%
SGD 2.88

*Applicable to Cash Upfront Accounts only and only for buy trades

** Only valid for new clients who apply before 30 Apr 2021. Existing clients are subject to SGD 5 minimum

For US Trades

Broker Type Trading Comm. Min. Comm.
DBS Vickers
Custodian
0.18%/0.15% *
USD 25/18 *
OCBC Securities
Custodian
0.30%
USD 20
FSMOne
Custodian
0.08%
USD 8.80
Standard Chartered
Custodian
0.25%
USD 10
SAXO
Custodian
0.06%
USD 4
TD Ameritrade
Custodian
Free
Free
Interactive Brokers
Custodian
USD 0.005/share
USD 1
Tiger Brokers
Custodian
USD 0.01/share
USD 1.99

*Applicable to Cash Upfront Accounts only and only for buy trades

Evidently, for both US and SG trades, Custodians generally charge lower commissions. This is especially so for US trades because of the increasing trend in zero commission brokerages in the US such as Robinhood and Webull.

Market Access Comparison

Another consideration for many investors would be the access they have to the various markets. Looking to invest in Tencent in the Hong Kong Exchange or Nintendo on the Tokyo Stock Exchange? Let’s see which markets our brokers have access to:

Broker SG US UK HK JP CA CN
DBS Vickers
OCBC Securities
FSMOne
Standard Chartered
SAXO
TD Ameritrade
Interactive Brokers
Tiger Brokers

Wow, most brokers seem to have pretty wide coverage! Ah, but this is not the full picture, let us take a look at some additional fees that these brokers charge before we make our final decision.

Additional Fees Comparison

Many brokers, especially low commission ones, charge additional fees as well. Some of these fees are well-hidden in their website and you might not be aware of them until you’ve incurred them (oh no!).

Broker Custody Fees Dividend Handling Fee Inactivity Fee Withdrawal Fee
DBS Vickers *
SGD 2/month
Max SGD 150
1% of Net Dividend
X
X
OCBC Securities *
SGD 2/month
Max SGD 150
X
X
X
FSMOne
X
X
X
X
Standard Chartered
X
X
X
X
SAXO
0.12% **
X
X
X
TD Ameritrade
X
X
X
USD 25
Interactive Brokers
X
X
USD 10/month ***
X ****
Tiger Brokers
X
X
X
X

*  Applies only to foreign stocks

** Not applicable to SGX stocks

*** Commissions are deducted from the Inactivity fee, meaning if you incur USD 6 in trading commissions, the inactivity fee for the month will be only USD 4. For investors aged 25 and below, the Inactivity fee is USD 3 per month. The inactivity charge is waived when portfolio value is above USD 100,000.

**** 1 free withdrawal per month

My Take and Recommendation

For beginner investors, I would recommend FSMOne. This is because FSMOne is:

  • Relatively beginner friendly: The interface is clean and easy to navigate. Information is easy to find and fees are transparent.
  • Low Commissions: Compared to other SG brokers, FSMOne has decently low commissions (not the lowest, but good enough to start with)
  • Good FX rates: FX rates are pretty decent (0.25% spread) which is much better than other SG brokers such as DBS Vickers or Standard Chartered
  • Able to Sell Directly from CDP: FSMOne also has this nifty feature which allows you to link your CDP to it and sell shares directly from your CDP. This is good if you’re trying to shift from a CDP broker to a FSMOne and you want to clean up your portfolio.
  • Free Transfer of Securities: Transfer of securities from FSMOne to another broker is free of charge (as long as both accounts are under the same name). I think this is a key point for a first broker because it gives you the freedom to switch brokers with minimal cost.  Many other brokers such as Tiger Brokers and SAXO charge fees to transfer positions out of their accounts.
  • Well-Established: FSM has been around since 2000, and is a well-established firm. I understand that many new investors, myself included, tend to have more faith in established brands when it comes to choosing their first broker and FMSOne is one that is here to stay.
  • Live SGX Prices: Many brokers actually only provide 15-minute delayed prices for SGX. FSMOne is one of the few that do.

If you only wish to invest in the US market, TD Ameritrade would be my number one pick instead. Personally, Tiger Brokers is a little too new for me and although it has a decent selection of markets and low commissions, I don’t see myself using it as a long-term broker yet.

P.S. If you’re keen on Tiger Brokers, do consider using my referral link: https://www.tigersecurities.com/accounts?invite=GR6O5M  

(The current promotion is 1 FREE Apple share and 5 FREE Xiaomi shares with a first SGD 2000 deposit)

Personally, I use Interactive Brokers, having recently moved over my holdings from my other brokers to Interactive Brokers. I chose Interactive Brokers because:

  • Low Commissions: Interactive Brokers has one of the lowest commissions in the market losing only to TD Ameritrade
  • Wide Market Access: Interactive Brokers has access to a crazy wide variety of stock exchanges (which TD Ameritrade loses out on)
  • Spot Foreign Exchange Rates: This means that Interactive Brokers exchanges your money into your desired currency exactly at the market rate at that point in time. This is a big deal if you are changing large amounts of money at once.
  • Access to alternative financial instruments: Recently, I have also begun to include Options into my investing strategy. Interactive Brokers provides access to options as opposed to many others on the list which do not.
  • Inactivity Fee: The inactivity fee is a big deal for most investors, USD 120 per year is a lot after all. However, when you invest regularly, the amount saved on foreign exchange differences, commissions and other fees will offset the inactivity charge anyways.
  • Fast Approval: One of my main considerations when I was deciding between TD Ameritrade and Interactive Brokers, was actually the approval speed. This was in the middle of 2020 where the market rally was in full swing. Interactive Brokers took only 1 day (some even say same-day) to approve my account while TD Ameritrade took almost 7 weeks to approve it (after some gentle reminders hehe).

To end off, I think ultimately choosing your first broker depends a lot on personal preference such as  where you intend to invest, how you invest as well as the features you need. As such, it is likely a decision that would defer from person to person. For example, if you wished to invest only in the US market, TD Ameritrade might serve as a better option.

I hope that this post has provided you some insight into the differences between some popular brokerages in Singapore and helped you to choose your first broker! (or second or maybe even third!) Cheers and happy investing y’all!

Full disclosure: I have used DBS Vickers, Standard Chartered, FSMOne, Tiger Brokers and Interactive Brokers. I am neither affiliated nor sponsored by any of these brokers and my opinion is not representative of the views of any of these brokers and are solely mine.

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