- Included Tiger Brokers comparison
- TDAmeritrade now has no commissions for US stocks
As individual investors, we all need to go through a brokerage to buy the assets we want. However, there are so many choices. Which one will give us the lowest fees? Which has the best rates?
In this article, we will break down the offerings of some of the top brokers available in Singapore for local and global markets to determine the best stock broker in Singapore for 2020.
We'll be grading brokers using a set of grading criteria that applies to brokers of both local and global markets below. Please note that there are more specific criteria that only apply to either Singapore market brokers or global market brokers below.
- Commission fees:
This stands for the amount you have to pay the broker per trade. Naturally, the lower the better! These fees are usually either a flat rate, or calculated at a percentage of your trade amount but with a minimum amount charged.
- Administrative fees:
Sometimes, brokerages can charge additional hidden fees that are nestled in their terms and conditions. Some of these include:
- Custodian fee: A charge for them to hold your stocks for you.
- Inactivity fee: A fee if you do not hit monthly commission minimums.
- Transfer fee: Charged if you want to transfer securities out of the broker to another broker.
- Withdrawal fee: Charged when you want to withdraw cash from your brokerage account to your bank account.
- Minimum amount:
Some brokers require you to have a minimum amount of funding for your account to be able to trade.
Are there desktop and mobile apps for trading?
Is there a good customer service? What do the customers think of this brokerage? If a lot of people say that it's good, then it should be good!
- Onboarding process:
How easy is it to create an account with the brokerage? We don't want to be struggling with their system - we want to use it!
- Custodian vs CDP (Singapore markets only):
This states whether the assets you have purchased are held by your broker in your name (custodian) or whether you hold your assets yourself (in the Central Depository, CDP). Note that CDP is only available for assets bought in the Singapore market. If you are looking to buy from the global market, your assets will be held in a custodian account of your broker.
While custodian brokers usually have lower commission fees, having your assets held in the CDP means that you are recorded as the owner in the company's books. This allows you to attend companies' annual general meetings to find out more about the company, as well as receive shareholder letters from the company, where they will update you on their latest news and decisions.
If you decide to go the custodian route, your broker has to forward any shareholder letters and dividends to you, which could incur a fee. As a result, you may get delays on important letters of notice such as share buybacks, and you may get denied entry to AGMs as you are not the recorded owner of the shares in the company's books - your broker is.
A CDP account also helps prevent brokerage lock in. If your stocks are stored in a custodian account, you are forced to stick with that broker or incur exorbitant transfer fees. This could hurt you if a better broker comes along in the future. If it's in your CDP account however, you can sell through any broker that supports CDP transactions.
- CPF usage (Singapore markets only):
Does this broker allow the use of CPF and Supplementary Retirement Scheme (SRS) funds for investment?
- Forex spread (Global markets only):
When trading overseas, assets are usually denominated in a currency other than SGD. Brokers offer automatic conversion of SGD to the asset's currency, but may have different spreads.
A spread is the difference between the bid price (people buying) and ask price (people selling) of the currency. Brokers will automatically convert you at the ask price, which is always higher. Thus, the spread between is what you have "lost" in currency conversion when you want to convert back, as you will be converted at the bid price. Hence, the lower the spread the better!
- Other fees (Global markets only):
- Currency conversion fee: Brokers may additionally charge a certain fee for converting currency on their platform. You can usually avoid this by creating an account denominated in the currency you are trading in and fund that account with pre-converted currency, but for convenience sake, most people do not. Therefore, the lower these fees are, the better (and more convenient) a broker is for funding in SGD and letting them handle the conversion for you.
- Dividend handling fee: A cut from any dividends paid out to you.
- Markets available (Global markets only):
Which stock exchanges can you trade at with this brokerage? The more the better, so you can manage all your global investments in one place.
You may notice that some brokerages have both a cash upfront and a cash account. The difference is that cash upfront accounts only allows you to trade with whatever cash you have deposited with them, and payment is immediate. This lets the brokerage know that you will always be able to pay for the securities you buy, allowing them to give you preferential rates on the fees.
On the other hand, cash accounts allow you to trade without paying immediately, meaning that you can defer payment for securities until 2 days later (T+2). These are usually for day traders, who want to flip securities by buying and then reselling them usually within the same day. For the average investor, cash upfront accounts work just fine, and you get cheaper rates too!
Note that we don't compare broker data such as live stock prices vs 15 minutes delayed prices etc. While different platforms offer different data, charts, insights and analytics within them, these information can also be found online and are not brokerage specific.
We also do not compare opening bonuses, offers or referral programs as these are subject to change at any moment. You should do your own research to find out if there are any attractive benefits after selecting your favourite broker.
Now that we have laid out our grading criteria, let's look at some brokers and compare them! Note that the brokerage list is non-exhaustive.
If you're only trading on the Singapore Exchange (SGX), there are a variety of local and international brokers to choose from. All fees in our comparison are denoted in SGD, and are for trades conducted through online/mobile only (not by calling or a human broker).
All trades are also subject to clearing fees, trading fees and a 7% GST charge. Any transfer from custodian accounts to and from CDP incurs a mandatory $10.70 handling fee. This is applicable to all brokers and will not be considered in the comparison.
Broker comparison (Singapore)
You can view the full table here. (Last updated 1 Aug 2020)
Best broker overall (Singapore)
DBS Vickers Cash Upfront (Buy) + FSMOne (Sell)
With DBS Vickers Cash Upfront, you can buy stocks for only a 10 SGD minimum commission at 0.12% of transaction value. That's one of the lowest commissions out there for the Singapore market.
Additionally, shares you buy go straight into your CDP account, meaning that they are held by you (see the grading criteria section to find out why this is beneficial).
If you want to open a DBS Vickers Cash Upfront account, we have a guide on how to open and trade using Cash Upfront here!
However, DBS Vickers Cash Upfront's preferential rates do not apply on sell trades. In other words, you will have to pay the full 25 SGD minimum commission on sell trades with DBS Vickers Cash Upfront.
To solve this, you can further create an FSMOne account, which lets you sell with 10 SGD minimum commissions at 0.08% of transaction value, which is also a steal! FSMOne also allows for linking to your CDP account by mailing in a form, letting you sell shares directly from your CDP account.
DBS Vickers Cash Upfront (buy) and FSMOne (sell) is the best broker combination for Singapore markets, but some people probably aren't too keen on having to create two brokerage accounts just to trade for the least fees.
Best custodian broker (Singapore)
For those who are purely trading Singapore markets, the new broker on the block, Tiger Brokers, is now the lowest cost brokerage, with commissions as low as $2.88/trade (waived to $0 till the end of 2020!).
Tiger Brokers also allows you to trade US, HK and China stocks on the same platform, so it could be a good pick if you want to diversify your portfolio, making it easy to transition to overseas markets in the future.
Sure, you will have to hold your shares in their custodian account, but custodian accounts are pretty safe these days, and provides you with the convenience of being able to buy and sell at the cheapest rates from the same broker.
That said, as of 1 Aug 2020, Tiger Brokers does not allow transferring of stocks to another broker from their custody, meaning you're hard stuck with them in the event that a better deal comes along in the future.
You could be uncomfortable with this "broker lock in", unlike other options like DBS Vickers Cash Upfront, where your Singapore stocks are deposited into your CDP account, making it independent of the broker you choose to trade with.
If this is a dealbreaker for you, just pick any cash upfront broker in Singapore as they all offer similar rates. We suggest either Standard Chartered, Saxo SG or FSMOne, since this makes the transition to overseas markets easier in the future for you.
When trading in markets other than Singapore, we have a few more choices. Before we compare, make sure your wanted brokerage supports all the markets you want to trade in.
Having all your international stocks in one brokerage is better for housekeeping, so you don't have to switch brokers just to trade in different countries. It's really not worth the headache.
Supported markets (Global)
You can view the full table here. (Last updated 1 Aug 2020)
Now, let us do a comparison of the main global market brokers. Note that all fees are denominated in their respective currency (e.g. if they are US fees, then it's denominated in USD). Please note that this list is non-exhaustive.
We will only compare the fees for US, UK and Hong Kong markets as these are among the most popular markets with Singaporeans. Feel free to head to the brokers' websites as linked to find out more about their fees for other markets.
Broker comparison (Global)
You can view the full table here. (Last updated 1 Aug 2020)
Best overall broker (Global)
No surprises here. Most Singaporeans love to use this broker too, and for good reason. All local brokerages have a minimum of 25 USD in commissions, which is simply absurd. In comparison, Interactive Brokers offers a minimum of 1 USD commission at rates of 0.005 USD/share. That is a 24 USD difference!
Consider this broker if you're under 25 years old, trade frequently (>8 times a year), or if you plan to trade more than 100,000 SGD worth of assets. Note that Interactive Brokers does not support trading on the Singapore market for Singaporeans at this time (1 Aug 2020), so it is purely for international investments only.
Note that Interactive Brokers is also one of the only few brokers that allow trading in UK markets, so if you're looking for some Ireland domiciled ETFs, this is the broker for you.
The only caveat is a 10 USD inactivity fee/month less any commission fees incurred that month. That means that if you had 6 USD worth of commissions in a month, you only have to pay an extra 4 USD worth of inactivity fees for that month.
You're already saving ~6+ USD per trade in commissions using this broker compared to other brokers, so it actually makes a lot of sense to use this if you trade at least once a month.
If you foresee yourself reaching 100,000 USD in the future, the above inactivity fee is completely waived, meaning you get the lowest commissions with no extra fees!
This broker also makes a lot of sense if you are under 25 years old. The inactivity fee drops to an affordable 3 USD/month, and any commissions you incur still gets deducted from this. This is truly a great way to start your investing journey early.
Of course, one might wonder how Interactive Brokers stacks up against the other offerings, especially with its inactivity fee.
If you're under 100,000 USD in net asset value, is Interactive Brokers worth it?
Let's compare it to other international brokerages. We know that local brokerages are out; 25 USD in commissions is simply too much. What about other popular brokerages like Saxo, TD Ameritrade and FSMOne?
Let's imagine a scenario where we are investing with 2,000 USD worth in SGD and compare the brokerages using all their minimum fees in a year.
|(Currency Conversion Fee)||2000.00||(-0.75%/-15)
|(Custodian Fee)||(120/yr - 1)
Just looking at it, it seems like FSMOne or TD Ameritrade is the clear winner. But consider this: Let's say we trade multiple times a year by investing frequently in small amounts. This is typical - we often do dollar cost averaging so we can avoid timing the market. For example, let us do the above trade of 2,000 USD worth in SGD once a month for a year. We get this:
|(Currency Conversion Fee)||24,000.00||(-0.75%/-180)
|(Custodian Fee)||(120/yr - 12)
As we can see, Interactive Brokers now has one of the highest remaining values along with FSMOne. The high commission rates of TD Ameritrade and Saxo's currency conversion fees begin to cut into their returns. When you convert back to SGD, Saxo hits you with another 0.75% conversion fee, so you end up incurring up to 1.5% in conversion fees!
Interactive Brokers becomes even better when your net asset value reaches 100,000 USD, whereby there are no longer any inactivity/custody fees, giving you the best value. If you were using another broker, you would then have to switch over, incurring transfer fees of around 100+ USD.
Interactive Brokers also offers trading in a lot of markets, letting you trade in US, UK, Japan and Hong Kong markets, to name a few. While FSMOne seems to have more value, you are limited to only the US and Hong Kong markets. And if you had picked a broker like TD Ameritrade, you would be limited to only US securities.
By having more markets to invest in, you are open for more portfolio diversification, minimizing your investing risks. Read more about investing risks here.
Therefore, we do believe that Interactive Brokers is the best broker for the average Singaporean for international trading, especially if you are below 25 years old, are confident of hitting the 100,000 USD net asset value within 8 years, or if you trade frequently (>6 times/year).
Refer here for a more detailed comparison among the popular brokers in Singapore.
If you have decided to open an Interactive Brokers account and would like to support us with no extra cost to you, do use our referral to open an account with Interactive Brokers through this link.
We also have a guide on how to open and fund an Interactive Brokers account here!
Best all-in-one broker (Local + Global) & infrequent traders
Once again, the new broker on the block wins again. Allowing you to trade in Singapore, US, HK and China markets, Tiger Brokers really is a pretty nice offering with some of the lowest fees around at $0.01 / share for US securities and 0.06% for HK stocks.
These commissions are pretty comparable to Interactive Broker's ones, making Tiger Brokers rather attractive, especially since they are offering quite a bit of sign up referrals.
Of course, this broker is new, so it might be scary putting a lot of money in here, but feel free to give it a go! Unlike Interactive Brokers, it doesn't have any custodian fees or inactivity fees, making it a very good buy and hold brokerage.
If UK stocks aren't that important to you, this broker could be even better than Interactive Brokers for those that won't be hitting $100k asset value anytime soon or trade infrequently.
However, do take note that when trading in other markets with stocks and ETFs that are in different currencies, you must convert sufficient currency (you can do so through their platform) before purchasing the stock.
If you have insufficient funds, they will "lend" you money in that respective currency required, and you will incur interest rates on this lending. If the stock or ETF you are buying isn't in SGD, make sure to convert manually before buying!
Best broker for Ireland domiciled ETFs
Standard Chartered/FSMOne/Interactive Brokers
For traders who trade very infrequently (<6 times a year) and will not hit $100,000 anytime soon (within 8-10 years), using Interactive Brokers may be quite daunting for you due to the seemingly high annual costs.
If you are okay with US, Singapore and Hong Kong markets only, definitely go with Tiger Brokers. They have the best combination of value with no annual fees.
However, many Singaporeans love trading Ireland domiciled ETFs so as to only pay 15% on the US's dividend handling tax thanks to a tax treaty between the US and Ireland. If you don't know what these are, do read our guide here.
For frequent traders or those who have >$100k or can hit $100k within 8 years, we would suggest sticking with Interactive Brokers anyway, which allows you to trade in the UK market at low commissions. Sure, there's an annual fee, but you still win out in savings overall. They are the most optimal choice here without a doubt.
However, the problem comes if you're an infrequent trader who wants to trade in UK markets. Both Tiger Brokers and FSMOne doesn't offer UK markets yet, so you are mainly down to two other major brokerages who offer it: Saxo and Standard Chartered.
Compared to other available brokerages, these two offer the best combinations of fees and returns. Local brokerages are out due to extreme commissions and other fees. Other brokerages either do not offer the market selections we want, or have exorbitant fees.
If you would like to trade in UK markets for Ireland domiciled ETFs to dodge the US dividend withholding tax, we would suggest using Standard Chartered if you're an infrequent trader (<6 trades a year).
That said, most people will be able to hit $100k within 8-10 years, so we would recommend Interactive Brokers anyway. The more you trade, the more value Interactive Broker gives you thanks to its currency conversion rates if you're trading with SGD.
If this is confusing to you, perhaps our detailed comparison between Interactive Brokers, Standard Chartered and Saxo will help you decide.
Refer to the comparison below to see which brokerage you should pick!
Best broker for US markets
If you trade only in the US markets, you will want to give TDAmeritrade a try. From 3 Aug 2020 onwards, they will provide Singaporeans with 0 USD commissions on all stock trades and no custodian fees, making it the most worth it among the brokers whether you are a buy and hold or a frequent investor.
There's a hefty 25 USD withdrawal fee, so make sure you don't need the cash you put in too soon.
Unlike other US only brokers like Tastyworks, TDAmeritrade provides currency conversion with no conversion fees, making it even simpler for Singaporeans to buy US stocks and ETFs.
Additionally, TD Ameritrade's brokerage platform, ThinkOrSwim, is one of the best in the industry, providing great charts and analysis. In fact, some people sign up to their platform just to use it without trading with them!
Standard Chartered vs Interactive Brokers vs Saxo
You might have seen our recommendations above and the pitfalls to avoid with these three brokers. In fact, these three brokers are the ones most Singaporeans have trouble deciding between, especially if you want to trade in the UK markets.
We thought that we should do a more detailed comparison to give you a better basis of the costs factored in choosing any of these brokers.
Interactive Brokers has great commissions, Forex spreads and a low currency conversion fee, but has an expensive annual fee.
Saxo has decent commissions and Forex spreads, but has a high currency conversion fee and a non-negligible annual fee as well.
Standard Chartered has high commissions and high Forex spreads, but has no annual fees.
This is the scenario that gives people the most headache: An investor with <$100k to invest, not expecting to hit $100k in value anytime soon (within 8-10 years), and invests infrequently (<6 times a year).
Note we will account for you buying shares only. When we buy in SGD, we convert once to other currencies and incur currency related costs only once. Most buy and hold investors will hold shares for a long time, but if you plan on selling, do note that you will incur the currency cost one more time (conversion fees, Forex spread).
Which should you pick? Let us compare using the above scenario, trading $2000 at 6 times a year in SGD. This will go on for a period of 8 years (to stimulate the effects of Interactive Brokers and Saxo's annual fee).
We further assume you will be following the Boglehead 3 fund portfolio, which a lot on infrequent traders in Singapore like to follow. Therefore, in this example, you only hold 3 investment products or corresponding ETFs. For simplicity sake, we assume you will buy 3 Ireland domiciled ETFs traded in USD.
|(Currency Conversion Fee)||(-2 * 6 * 8)
|(Forex Spread Loss)||(Spot)
|(Commissions)||(-1 * 6 * 8)
|(-4 * 6 * 8)
|(-10 * 6 * 8)
|(Custodian Fee)||(-120 * 8 + commissions)
|(Transfer to IB >100k)||(None)
As you can see, after factoring in currency conversion costs, Interactive Brokers performs spectacularly in the end anyway, even if you trade infrequently. Honestly, the only under-performing broker appears to be Saxo, with a significantly lower final value than the rest.
Note that this only accounts for a simplified scenario. Based on your own trading patterns, do calculate on your own and see which choice is the best for you.
We would recommend going with Standard Chartered if you aren't confident of hitting $100,000 within 8-10 years and trade infrequently (<6 times a year). That said, DO NOT sell with Standard Chartered so you don't lose on the currency spread when you sell.
Wait until you hit $100k or are close to $100k before transferring over to Interactive Brokers. You'll get the greatest savings that way.
Only consider Saxo if you're trading in the same currency as the shares' currency (e.g. deposit in USD and buy USD denominated shares). This way, you avoid their exorbitant 0.75% currency conversion fee and Saxo becomes more attractive for very infrequent investors.
Alternatively, convert your currency first using a service like Transferwise before depositing the currency in.
Still, in most cases, we would totally recommend Interactive Brokers for both frequent and infrequent traders. If you can hit $100k within 8-10 years, definitely go for Interactive Brokers.
As mentioned, do consider helping us out and opening an account through our referral here. Note that we are recommending Interactive Brokers purely based on the calculations above and NOT for the referral!
- DBS Vickers Cash Upfront (Buy) + FSMOne (Sell) for Singapore markets, but you can consider Tiger Brokers.
- Interactive Brokers for international markets.
- Standard Chartered / Interactive Brokers for infrequent traders.
- Tiger Brokers if you want to trade Singaporean and international markets all with one broker.
- TDAmeritrade if you exclusively trade in US markets.
I believe this broker combination is the best for most kinds of Singaporean investors. If there are any discrepancies or corrections in the data above, do comment and let me know. I will try to update it as soon as I can. I hope this helped you, as I had a really hard time trying to compare brokerages when I first started as well.
As mentioned, if you decide to open an Interactive Brokers account after reading this article and would like to support us with no extra cost to you, kindly open an account using our referral link. We really appreciate it! We also have a guide on how to open your Interactive Brokers account here.
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