SCB Singapore has a new i-banking cum brokerage system where you can enjoy NO MINIMUM brokerage fees. The catch is:
-No Contra. You have to have the cash in your Securities account before they allow you to key in your order. However, settlement for SGX is still done in T+3. Not a problem for those who are investing with money they have. Only a problem for those who contra beyond their means.
-Your shares will be kept in SCB Nominees. This subjects you to the counterparty risk of SCB failing; which I think is pretty remote. There are no custodian fees.
EDIT: I've been informed that even if SCB does fail; the legal and equitable titles are still ours; the shares will still belong to us should SCB Nominees fail.
-0.20% for SGX shares and 0.25% for NYSE, NASDAQ, Paris Bourse, Deutsche Boerse, London Stock Exchange, Swiss Stock Exchange, Tokyo Stock Exchange, Australian Stock Exchange, Amsterdam Stock Exchange etc. Notably absent is the Bursa Malaysia.
I am very excited with the prospect of being able to invest outside of Singapore at very cheap rates.
I am also very excited with the prospect of being able to do Dollar Cost Averaging on stocks which I think are at good prices, one lot by one lot, since I do not have a high capital. (e.g. Sabana REIT and PohTC)
Lastly I am excited with the prospect of being able to practice my TA with small lots. e.g. I can buy 1 lot of, say, Noble Group if I believe it's TA signals are good. This, I believe, is better than paper trading (which I think is useless, by the way) and better than risking a large portion of my capital, since I still am at the learning stage.
An example of brokerage fees:
1 lot of PohTC- 40c ($400)- commission: 80c
1 lot of Noble Group Ltd- $2.00 ($2000)- commission: $4
Obviously for the people who trade with minimum $10,000 each time, this is not a big breakthrough but for small fry like me, this is a very exciting prospect.
I will be going down to the Battery Road Branch tomorrow during lunchtime to apply.
The Old Boy's
Wah! You doing an advertorial for SCB? You huat liao! ;)
ReplyDeletehey AK,
ReplyDeleteno lah! I don't have any vested interest!
There is no free lunch in investing. Your shares will be kept in SCB Nominees.
ReplyDeleteDoes anyone believe that Baring Bank could fail? Yes it did.
Again, does anyone believe Lehman Brothers could fail. Yes it did.
So can this brokerage unit of SCB fail? No meh?
Hi CW,
ReplyDeleteMy reply to that would be to ask the people who have their money in DBS Nominees, UOB Nominees, OCBC Nominees, Philip Securities Nominees, Kim Eng Nominees, Citibank Nominees etc. Are these banks infallible? I don't think so. So, why do people put their trust in these nominees? And why would you not accord the same trust to SCB?
A question to you would be, what if SGX (and hence, CDP) fails? Is it not unthinkable?
"It is probably easiest to imagine the nominee service as being similar to that offered by 'custodians' to fund management firms. It is a legal separation of assets from a stockbroker.
ReplyDeleteThis is done to ensure that client assets are not at risk from the poor trading of the brokerage. Otherwise, if the brokerage was holding securities for clients and something unfortunate were to befall the company (a legal claim, bankruptcy etc), client assets could be considered to belong to the firm and be used for the wrong purposes. "
http://www.stockexchangesecrets.com/london-stock-exchange-nominee-accounts.html
Just for some small saving in trading cost and SCB needs these small guys to transfer their shares to SCB nominee account.
ReplyDeleteWhat are the risks to SCB? I don't understand the logic? Why not in CDP?
Hi CW,
ReplyDeleteI guess SCB is banking on volume.
Why not CDP? I can venture a guess; they want you to buy and sell with them.
hi IZ,
ReplyDeleteno need to guess. scb is not a US bank and still has significant prop trading operations (i may join it someday). they will actively use their capital to bet against you if they think you are making stupid trades.
http://www.bloomberg.com/news/2011-05-04/standard-chartered-first-quarter-income-grew-in-double-digits-.html
In its wholesale banking business, Standard Chartered’s own-account income in the first quarter had “double digit” growth. Client income continued to contribute over 80 percent of total wholesale banking income, it said.
whether or not you think this is an ethical practice it shouldnt affect your decision to do trading with them though, as long as they offer better execution/trading platforms than the rest.
however if you practice your TA then contra trading may limit your ability to do so depending on your timeframe.
S
Hi,
ReplyDeleteIf i am not wrong, DBS ibank started this type of service first which they call "cash-up-front-trading", tying with DBS Vickers Online. i think many other banks and even brokerages will follow suit. i hope Singapore "style" of trading will catch up with U. S. one day.
At the of the day, only Companies which can offer better and cheaper services will thrive. Nothing in this world is going to stand still. No, nothing ever.
DBSV still have the MINIMUM brokerage fees which is not good for DCA for us as Retail investor.
ReplyDeleteHi student,
ReplyDeleteYes. I am not perturbed by proprietary trading against me. I am, after all, a small fry. I win or lose in the hundreds. Thanks for your comments again. Regarding trading, I can finally play with low amounts of capital, since my TA is still not up to par. I wish you well should you join SCB :)
Hi Temperament,
Like what Steven mentioned, DBS Vickers upfront still has minimum $18 commission. This scb no minimum is really a breakthru for low capital investors. POEMS DCA is really a rip off in comparison. I agree with you, the only constant is change, and I hope this hostile attempt by SCB to take market share will lead to lower trading costs. Good luck to us all :)
Hi IZ,
ReplyDeleteone more thing to respond on. martin lee's recent post: http://www.lioninvestor.com/standand-chartered-online-trading-account/ pointed out one more catch that you did not discuss in this post, which is the upfront funding. just fyi. the scb account looks like the best on the market for small fry.
my personal opinion is that your TA will -never- be up to par because TA is fundamentally flawed. you cannot have any confidence that it will work unless you rigorously backtest your trading rules. as i have shown in my research, the RSI and Bollinger Bands are two TA rules that work exactly OPPOSITE as intended.
Hi Student,
ReplyDeletethanks for the link. I believe I did mention it's cash upfront in my paragraph "No Contra- bla bla bla".
I agree with you; this account is by far the best for small fry (like me). POEMS' DCA scheme is a downright rip off compared to this. (You have to keep your scrips with Philip Securities Nominees too)
I am still learning; I still haven't found what works and what doesn't for me. I look forward to learning from you and other veteran bloggers; especially since you have such a unique approach to equities. (Honestly it's pretty over my head at this point of time, haha)
If my shares will be kept in SCB Nominees, am I still qualify to join SGX securities lending scheme?
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