If you are interested in buying some stocks, bonds or unit trusts to plan for your retirement, you would need to open an account with a broker to start putting your money to work. However, with so many options available, how should you choose? For an average investor without hundreds of thousands of dollars to trade, it’s important to minimize his trading commission cost, which can eat into his returns quickly. To help you understand what it costs on average to trade stocks online in Singapore, we have prepared the guide below on the average cost of trading stocks. Besides commission, we also assess other important characteristics like international coverage.
Table of Contents
Average Commission Rate for Trading Stocks Online
In Singapore, there are 13 major brokerages that you can use to trade stocks. Most of them are owned by big financial institutions like DBS, Citi and Standard Chartered, while some are still independent. All of these brokerages have minimum commission per trade, which scales as the size of your trade increases. For instance, most brokers will charge around S$25-S$28 of minimum fee for every trade. If your trade is big enough, then trade commission will scale to about 0.25% of your trade or lower, depending on the size of your trade.
Of note, Saxo Capital Markets is an online only brokerage firm that offers the lowest possible fee on most securities available to a retail investor in Singapore. Below, we have prepared a summary table listing commissions as well as geographic coverage of different brokerage firms.
|Name||Min Fee||<S$50k||S$50k-S$100k||>$100k||US||Japan||HK||# of Online Markets|
|SAXO Capital||S$15||0.120%||0.120%||0.120%||$0.01/share, min S$9.9||0.2%, min JPY2,500||0.15%, min HKD150||36|
|City Index (CFD only)||0.080%||$0.15/share||0.050%||0.150%||5,000|
|IG (CFD only)||0.100%||0.100%||0.200%||0.250%||10,000|
|Interactive Brokers||S$2.5||0.080%||0.080%||0.080%||0.5% min $1||0.08%, min JPY80||0.08%, min HKD18||24|
|TD Ameritrade (thinkorswim)||Flat S$14-S$15(USD10.65) for stocks, USD10.65 + $0.81 per contract for options|
|Standard Chartered||S$14-S$15 (USD10)||0.200%||0.200%||0.200%||0.25%, min $10||0.25%, min JPY1,000||0.25%, min HKD100||10|
|U Trade||S$18||0.180%||0.180%||0.180%||0.3%, min $20||0.25%, min HKD100||4|
|POEMS||S$25||0.280%||0.220%||0.180%||0.3%, min $20||0.5%, min JPY3,000||0.25%, min HKD100||21|
|iOCBC||S$25||0.275%||0.220%||0.180%||0.3%, min $20||0.75%, min JPY3,000||0.25%, min HKD150||26|
|KGIFraser||S$25||0.275%||0.220%||0.180%||0.3%, min $20||0.5%, min JPY1,500||0.25%, min HKD100||15|
|i*Trade||S$25||0.275%||0.220%||0.180%||0.3%, min $20||0.25%, min HKD50||6|
|Citibank Brokerage||S$28||0.250%||0.200%||0.180%||0.35%, min $29||0.3%, min HKD120||3|
|DBS Vickers||S$25||0.280%||0.220%||0.180%||0.3%, min $25||0.5%, min JPY3,000||0.2%, min HKD100||7|
|RHB Securities||S$25||0.275%||0.220%||0.180%||0.3%, min $20||0.25%, min HKD100||4|
|Maybank Kim Eng||S$25||0.275%||0.220%||0.180%||0.3%, min $20||0.5%, min JPY3,000||0.25%, min HKD100||9|
|Lim & Tan Securities||S$25||0.280%||0.220%||0.180%||12|
Singapore is a relatively small market with only a limited number of options for investors. For instance, Straits Time Index is comprised of only 30 companies, while other options like New York Stock Exchange and Hong Kong Stock Exchange offer hundreds and thousands of options. Furthermore, some investors might be more interested in emerging markets like Philippines, Malaysia and Thailand. While most brokers will claim that they offer all the countries, in many instances they only offer foreign trades over the phone at higher costs. You should make sure that the brokerage of your choosing provides easy online access to the international markets you desire.
Of note, Interactive Broker only charges a minimum of S$2.5 and a flat rate of 0.08% commission, compared to the average minimum of S$22 and commission rate of 0.25% for local brokers in Singapore. However, due to a government ban to protect local industries, Singaporeans cannot use IB to trade Singapore securities. Therefore, IB is an excellent low-cost option if you are only interested in buying stocks and bonds overseas.
Size & Frequency of Your Trades
All in all, commissions matter more for people who tend to trade more frequently with smaller amounts. For instance, let’s consider a hypothetical comparison. Over a course of 1 year, Bob has a portfolio of S$100,000 that he trades once a month, while Jane has a portfolio of S$50,000 that she trades once a week. For simplicity, let’s assume they trade 20% of their portfolio each time they make a transaction.
Since Bob’s trades will be S$20,000 each, he will be paying 0.25% per dollar of transaction, while Jane’s S$10,000 trades will be cost her S$25 per transaction (0.25% of S$10,000 is equal to the S$25 of minimum commission). After a whole year, although Bob is running twice as much capital as Jane, Jane will have paid more than double the commission that Bob will have paid. As you can see, this is because Jane is trading every week while Bob only trades once a month. Therefore, you need to consider how much and how often you will be trading before choosing an online broker. For portfolios with large amounts of capital with infrequent trades, commission rates will generally matter much less than they do for portfolios with small amounts with frequent trades.
|AUM (SGD)||Transaction Size||Amount Traded||Commission Rate||Commission Dollars||As % of AUM|
Other Services to Consider
In some cases, an investor may care more about other services like data link, cost of margin financing or borrowing stocks (for shorting), availability of options, etc. In many cases, only certain brokers can provide a great user interface coupled with live data integration. While this may not matter to some, the minute-by-minute data upload maybe crucial for some strategies. Also, if you have a simple strategy with long term time horizon, you may only need care about low trading commission cost. Be sure to do you own research in terms of what kind of strategy you want to employ, and what services will matter most to you. This way, you can focus on picking stocks, bonds or unit trusts that's the most ideal for you instead of worrying about commission costs that will eat into your returns.