7 Online Brokerages vs Traditional Brokerages in Singapore: Making The Right Investment Choice
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Are you new to investing and always wonder should you open a brokerage with online broker like Moomoo or traditional broker like DBS Vickers? I mean, both let you buy and sell stocks, both are great brokerage, and both don’t look that different right?
Well, you are half right, but actually, there are a lot of difference between a traditional brokerage and an online broker.
- Are you looking to buy local or global stocks?
- Are you looking for various investment options?
- Are you looking to save on your brokerage fees and get higher ROI?
You choice of brokerage will affect each of these questions asked, understand the key differences between these two types of brokerages can help you reach you financial objectives faster.
KEY TAKEAWAYS
Understanding The Different Brokerage Accounts in Singapore
When jumping into investing in Singapore, you need to know the difference between traditional and online brokerages is foundational. Your choice can significantly impact your investing experience and success in the financial markets.
What Is a Traditional Brokerage?
A traditional brokerage provides personalized investment services often through face-to-face interactions. You might find these services appealing if you value:
- Personal advice from professional brokers who understand the intricacies of the Singapore securities market.
- Full-service offerings, including estate planning, tax advice, and research.
- Physical access to broker offices for in-person consultation.
Traditional brokers generally offers CDP-Linked accounts, but may offer both CDP and custodian account options.
What Is an Online Brokerage?
An online brokerage is your gateway to modern investing via digital platforms. Benefits include:
- Lower fees: Typically, online brokerages have lower costs due to less overhead.
- Convenience: You can trade through trading platforms or mobile apps whenever the market is open.
- Control: Place trades and manage your investments directly, ideal for self-directed investors.
For all online brokerage in Singapore that involved in “Capital Market” trading, they must adhere to MAS regulations, ensuring a safe trading environment. These are generally custodian accounts which offers lower brokerage fees.
Regulatory Environment in Singapore (MAS)
The Monetary Authority of Singapore (MAS) oversees the framework within which both traditional and online brokerages operate. Some points to understand:
- Licensing: All brokerages need a Capital Markets Services license from MAS.
- Investor protection: MAS ensures fair and transparent market conduct.
- Account safety: Your securities can be safely held in a CDP account directly or in a custodian account through the brokerage firm.
A licensed broker will look something like this:
7 Key Difference Between Online Brokerages vs Traditional Brokerages in Singapore
Each type of brokerage carries distinct advantages in terms of costs, trading market access and investment options.
- Online brokerages in Singapore offer a dynamic platform for the tech-savvy investor. They provide a user-friendly interface that allows for quick and autonomous transactions.
- Traditional brokerages come with a touch of personal service. They are typically associated with more personalized advice and face-to-face interactions.
1. Comparing Brokerage Costs
When opening a brokerage account in Singapore, understanding the different types of costs involved is crucial for both new and seasoned investors. Let’s break down these costs to see how they impact your trading decisions.
Understanding Commission Fees and Cost Considerations for Singapore Traders
BROKERAGE | MIN. FEES (SGD) | TRADING COMMISSIONS (SGD) | ACCOUNT TYPE | CUSTODIAN FEES (SGD) |
---|---|---|---|---|
Moomoo Singapore | $0.99 | 0.03% Trade Value | Custodian | No custodian fees |
Tiger Brokers | $0.99 | 0.03% Trade Value | Custodian | No custodian fees |
Phillip Securities | $25.00 | 0.08% Trade Value | Custodian | $15 Per Quarter |
KGI Securities | $25.00 | 0.18% Trade Value | Custodian | $2.14 Per Quarter |
Lim & Tan Securities | $25.00 | 0.18% Trade Value | Custodian | $15 Per Quarter or 0.0025% pa of Market Value of Share |
iFAST Financial | $8.80 | 0.08% Trade Value | Custodian | No custodian fees |
Maybank Kim Eng Securities | $25.00 | 0.275% Trade Value | CDP | Not Applicable |
DBS Vickers | $25.00 | 0.12% Trade Value | CDP | Not Applicable |
UOB Kay Hian | $25.00 | 0.18% Trade Value | CDP | Not Applicable |
OCBC Securities | $25.00 | 0.275% Trade Value | CDP | Not Applicable |
CGS-CIMB Securities | $25.00 | 0.18% Trade Value | CDP | Not Applicable |
- Commission Fees: Brokerages charge these per transaction, affecting profitability.
- Custody Fees: Applied to stocks not traded on the SGX, for safekeeping offshore assets.
- Clearing Fees: The clearing house imposes these to process trades and ensure settlement.
- Platform Fees: For using the brokerage’s trading software, platforms may charge ongoing fees.
Traditional Brokerage: Higher Brokerage Cost
In my experience trading Singapore stocks, traditional brokerages tend to have higher costs. Here’s what you might encounter:
- Commission Fee: Typically ranges between 0.2% to 0.5% of the trade value.
- Minimum Fees: Often SGD 25 for SGX trades, which can be higher for US markets.
Example: For an order worth SGD 10,000:
- Commission Fee: SGD 25 (assuming a 0.25% rate).
- Clearing Fee: Additional SGD 10, rounding to a total cost of SGD 35.
Online Brokerage: Lower Brokerage Cost
Online brokerages have revolutionized trading by significantly reducing costs:
- Lower Fees: You might pay as little as 0.03% to 0.12% commission fee.
- No Minimum Fee: Some online platforms waive minimum fees for SGX trades.
While costs are a key factor, they should not be the only consideration. The choice between traditional and online brokerages depends on your specific trading needs and frequency.
As an investor myself, I personally weight cost as one of the most important factor when choosing the right platform.
2. Trading Markets Access
When you’re ready to take control of your investment portfolio, understanding the markets you can access through various brokerages is key. Personally, this is something which I am most concern of when choosing the right brokerage.
Traditional Brokerage: Focus on Local SGX Market
Traditional brokerages in Singapore primarily offer you access to the Singapore Exchange (SGX), where you can trade a variety of securities like stocks and options, all from local equities markets. Here’s what you can expect:
- Local Insights: Brokerage firms often provide personally-tailored advice on SGX-listed companies.
- Physical Interaction: You can enjoy face-to-face meetings to discuss investment decisions and obtain insights into Singapore stocks.
With a traditional brokerage, you might find a sense of familiarity and hands-on assistance as you navigate your investments in the local market.
Online Brokerage: Access to Global Stock Market
In contrast, online brokerages expand your investment horizons dramatically, providing a platform to trade internationally. An example of such a platform is moomoo, which lets you explore beyond SG equities:
- Extensive Reach: Trade US stocks, HK stocks, China stocks, and more.
- Diverse Portfolio: Online platforms enable a more diversified investment portfolio with global market access.
- Real-time Trading: You’re empowered to make trades that align with global market movements, directly impacting your investment strategies.
3. Investment Options
When deciding on an investment strategy in Singapore, you’re confronted with a choice between traditional and online brokerages, each offering distinct avenues for diversifying your investment portfolio.
Traditional Brokerage: Limited Investment Options
Traditional brokerages in Singapore typically offer a conventional approach to investments. You may find:
- A focused selection of investment products such as stocks, bonds, and perhaps a few mutual funds.
- Personalized service where brokers facilitate trades, potentially guiding less experienced investors through their early investment decisions.
This personalized touch comes with restrictions:
- Less exposure to international markets or advanced financial instruments like options, Forex, or CFD.
- Higher fees that might deter frequent trading or small-amount investments.
Through my professional interactions with traditional brokerages, I’ve observed their cautious approach. They often prioritize lower-risk options like blue-chip stocks and government bonds.
Online Brokerage: Wide Range of Investment Options
Online brokerages expand your horizons significantly. They provide:
- A broad spectrum of investment vehicles, from equities to ETFs, Forex, CFDs, REITs, commodities, and even cryptocurrencies like Bitcoin.
- Trading platforms like moomoo, which empower you with real-time market data, analysis tools, and the agility to make quick investment decisions.
- The capacity to manage a high risk investment portfolio with instruments like options trading, all from the comfort of your own home.
Utilizing online brokerages, you have the freedom to diversify across different asset classes.
- Incorporate both high-risk and conservative investment strategies into your financial plan.
- Trading with generally lower fees
Online platforms are an attractive option for both the beginner and savvy investor.
4. Trading Features
When considering brokerage accounts in Singapore, you’ll find significant differences between the trading features of traditional and online brokerages. Your choice will impact the ease, flexibility, and depth of your investment decisions.
Traditional Brokerage: Basic Trading Features
Traditional brokerages offer you a more personal touch, along with:
- Human Brokers: Direct contact with experienced brokers for trade execution.
- Basic Trades: Execute standard market and limited orders through a broker.
This hands-on approach can provide reassurance, especially if you’re new to investing or prefer a more guided experience.
Online Brokerage: Multiple Advanced Trading Features
Online brokerages unlock a suite of advanced trading features:
- 24/7 Access: Trade anytime via desktop or mobile apps, giving you control.
- Real-Time Quotes: Immediate market data to inform your investment decisions.
- Advanced Orders: Options to place market, limited, stop, or fractional shares orders.
- Advanced Charting: Tools for analytical insights that enable informed trades.
- Automated Trading: Set parameters to automate your investment strategy.
Empowering yourself with these features let you have allows for better ease of trading, especially for day traders.
Whether it’s the classic approach of traditional brokerages or the dynamic, tech-driven online platforms, your choice should serve your financial objectives and trading comfort level.
5. Content and News Update
Understanding the differences between online and traditional brokerages involves recognizing how each responds to market news and trends. Here, we’ll explore the specifics of content and news updates across these platforms.
Traditional Brokerage: Mainly for Transactional Purposes
With a traditional brokerage in Singapore, your interaction with market news might occur through:
- Quarterly reports
- Personalized letters
- Meetings with your broker
However, these services are usually more transactional and may not provide real-time financial news or immediate market analysis.
Online Broker: Making Trades and Stay Up-to-date With the Market
In contrast, an online broker empowers you in the following ways:
- Real-time updates: Access live data as events unfold.
- Community forums: Engage with a community for insights.
- Financial calendars: Helps you stay on top of market events.
- Industry analysis: Offers comprehensive and up-to-date analysis to inform your trades.
By leveraging technology, online brokerages ensure that you’re informed and ready to make swift decisions in a dynamic market.
6. Customer Support and Services
Choosing between online and traditional brokerages in Singapore hinges on the type of customer support and services you value most. As an investor, understand that your brokerage choice will impact how you access help and information.
Traditional Brokerage Platform: In-Person or Online (Office Hours)
With a traditional brokerage, you benefit from:
- Direct personal contact: You can meet brokers face-to-face and discuss your portfolio in-depth, offering a personal touch.
- Office hours availability: These services are often available during standard working hours, aligning with the typical business day.
Online Platform: Customer Service Offered Online (24/7 Availability)
On the other hand, online brokerages provide:
- Round-the-clock assistance: Get help anytime with 24/7 service, essential for urgent inquiries.
- Online resources: Access a wealth of information, tutorials, and FAQs to educate yourself at any time.
In your journey as an investor, knowing you can rely on support whenever needed brings peace of mind. Whether it’s comprehending complex terms or resolving technical issues, the service provided is a cornerstone of your investment experience. Which type resonates with you—consistent accessibility or the human touch of traditional interactions?
7. CDP or Custodian Brokerage
Choosing between a CDP-linked or a custodian brokerage account affects not just how you buy and sell on SGX but also your ownership rights and fee structure.
Traditional Brokerage: Mostly CDP-Linked Account
Central Depository (CDP) Accounts are directly tied to the SGX:
- You hold legal ownership of stocks, which are credited directly to your CDP account.
- You have voting rights and can attend AGMs, giving you a real stake in corporate decisions.
Key Benefits and Drawbacks
Pros | Cons |
---|---|
Direct ownership and control of your investments. | Personal details are publicly listed, leading to less privacy. |
No custody fee for SGX-listed shares. | Limited to Singapore markets, restricting global investment options. |
Dividends are paid straight to you. | Higher costs with trading fees and charges. |
Online Brokerage: Mostly Custodian Account
Custodian Accounts helps to hold your stocks with the brokerage firm for lower fees:
- Securities are registered in the broker’s name, but you are the beneficial owner.
- This enables access to a wide range of international markets beyond just the SGX.
Key Benefits and Drawbacks:
Pros | Cons |
---|---|
Lower brokerage fees make frequent trading more economical. | Some brokerages might apply custody fees, although others waive these fees. |
Increased privacy as securities appear under the custodian’s name. | You might also experience slower access to dividend payments and corporate action notifications. |
The custodian also handles hands-off dividend management. | You’ll have less immediate control over your securities, though you’re still the ultimate owner. |
When choosing a brokerage, consider the specifics of liquidity, privacy protection, wide market access, and dividend management.
Align your brokerage choice with your investment strategy and personal preferences. Always keep in mind the balance between lower brokerage fees and the level of direct ownership you desire.
Should You Choose Traditional Brokerage or Online Broker?
I don’t really have an answer for you, but I can share with you my own personal experience as an investors with decades of experience.
Personally, I uses both traditional brokerage and online broker for my investment.
I had a traditional brokerage account because it is my first broker account when I first started investing. As during that time, online brokerage is not as common.
With a traditional brokerage account, I need to pay hefty fees for each trade, thus I generally adopt the trading strategy of “buy and hold” which reduces the amount of trading fees I need to pay.
Currently, I prefer using online brokerage for all my trades, not only the fees is close to zero, it offers trading App making it much more convenient to place a trade or to simply do my research.
If you are undecided, you can check out Moomoo, I personally use it for my trades simply because of the following reasons:
- $0 commission fee for US market and one of the lowest commission fees for SG and HK market.
- Access to multiple stock market and wide variety of investment options; Stocks, Forex, Mutual Funds, Bonds, ETFs, REITs, Cryptocurrency.
- User friendly interface perfect for beginner investors, seasoned traders and lazy investors like myself.
Go on and try it yourself, Moomoo currently offer welcome bonus for new signups as well!
BEST FOR: Beginner Retail Investors and Professional Traders Looking For All-In-One Trading App to Invest in SG, US, HK and China.
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Disclaimer: All views expressed in the article are independent opinion of the author, based on my own trading and investing experience. Neither the companies mentioned or its affiliates shall be liable for the content of the information provided. The information was accurate to the best knowledge of the author. This advertisement has not been reviewed by the Monetary Authority of Singapore. * T&C Applies
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Antony C. is a dividend investor with over 15+ years of investing experience. He’s also the book author of “Start Small, Dream Big“, certified PMP® holder and founder of IncomeBuddies.com (IB). At IB, he share his personal journey and expertise on growing passive income through dividend investing and building online business. Antony has been featured in global news outlet including Yahoo Finance, Nasdaq and Non Fiction Author Association (NFAA).