Monday, September 16, 2013

Standard charted brokerage account FAQ

I get quite a bit of questions on the standard charted brokerage account relating to my post on my STI ETF regular savings plan (http://madstranger.blogspot.sg/2013/07/nikko-sti-etf.html). So I think it will be good to provide a list of frequently asked questions on the account opening here.


1) Which accounts do I need to start buying shares via the standard charted brokerage account?

For the account set up, you require the following
A) a savings account
I used their e-saver. There is no minimum sum to maintain. But the account do not come with an ATM card. Every transaction you need to do is via internet banking.
See details: http://www.standardchartered.com.sg/save/saving-esaver.html

B) brokerage acct
Account for you to buy and sell shares

C) settlement acct
If you intend to trade other markets apart from SGX, or want to buy local shares denominated in foreign currencies, you need the corresponding foreign currency settlement account. Otherwise, you only need the SGD settlement account.

You need to transfer money from your savings account to the settlement account before any purchase. i.e no contra



2)  How about the CDP account?
As shares purchased via the stanchart brokerage account are held by the bank itself, you do not require a CDP account.
If you already own shares in your CDP account, you cannot sell shares you own in your CDP at the stan chart account. The 2 accounts are separate.
If you do not own a CDP account, you can open one via the typical brokerages (e.g. poems, dbs vickers, uob kayhian etc). But note that the stan chart brokerage account and the CDP account are separate.


3) Would there be any fees associated with the transfer of funds in/out?

SCB charges for transferring out:
http://www.standardchartered.com.sg/promotion/securities-trading/promotnc.html
$10.70 (inclusive of GST) per 1000 share per counter transferred, up to a cap of $107 (inclusive of GST) per counter; transfer charges may be levied depending on incoming banks.

 SCB charges for transferring in:
* Free;
Transfer charges may be levied depending on outgoing banks

CDP charge for transferring in/out:
$10.70 per counter

  
4) Understand that there is the trading fee of 0.2% as well as the SGX clearing fee of 0.04% and GST. May I ask how much would the GST be?
You are right on the part of the 3 component charges (commission, clearing fee and GST). The breakdown of the charges are as follows:

Commission = 0.2/100 * trade amount
Clearing Fee = 0.04/100 * trade amount
GST = 0.07 * (commission + clearing fee)
** All amounts rounded to nearest 2 decimal places.


5) What disadvantages are there for using the stanchart brokerage account as compared to holding my shares under the cdp account/ using other brokerages?

  • You receive dividends one working day late. CDP needs to pay SCB your dividends first, before SCB pays you.
  • For other corporate actions, there will be a more significant delay or tighter timelines. 
  • For foreign currency settlement accounts top up, the spread between their buy and sell can be very huge.
  • No smartphone application for trading
  • Cannot buy shares using your CPF or SRS funds

3 comments:

Anonymous said...

thanks for your FAQ
i did not know CPF ,SRS are not eligble

Syaffiq Salleh said...

Hi there, regarding opening a brokerage account with SC, will I need to pass their Customer Account Review (CAR)? I'm new to investing and find the DIY procedure much appealing compared to the POSB Invest Saver. Do advise, cheers.

Mad Stranger said...

Hi Syaffiq Salleh,
If I recall correctly, when the Specialised investment product started, the STI ETF was under the list where u need to pass the CAR to invest in it.

But in recent years, the STI ETF was reclassified under another category. So u should be able to buy the STI ETF without the test.