You will be able to compare local bank brokerages, local online brokers and international brokers on custody, cost and convenience.
Hakim opened his first brokerage account through the bank that pays his salary. It took five minutes, the shares landed in his CDP account, and he never thought about it again. Then a colleague showed him an app that charged nothing to buy US shares, and Hakim wondered how much he had been overpaying for the last four years.
His colleague Rachel had gone the other way. She opened an account with an international broker because a forum said it was cheapest, and only later noticed that her account agreement named a company she had never heard of, in a country she had never visited.
Both of them chose on one number. This lesson gives you the five things to compare instead, and shows what each kind of broker usually gives up to be good at something else.
The first type sits inside a bank group you probably already use. You log in with the same app, money moves from your savings account without a transfer, and SGX shares usually settle into your own CDP account. As lesson 1.1, Your overseas shares sit in someone else's name, explained, that means SGX shares are recorded in your name at The Central Depository.
Many of these brokerages also offer US and other overseas markets. Those holdings go into a custodian account, the same pooled arrangement you met in lesson 1.1, because CDP only holds SGX securities.
What you trade away is cost. Bank-linked brokerages often charge higher commissions than other types, and the currency conversion is often done at the bank's own rate, which can be some way from the mid-market rate. Module 2 shows you how to measure that gap. Convenience has a price, and for a few large SGX trades a year it may be a fair one. For small monthly purchases of US shares, it adds up.
The second type is a broker based in Singapore and licensed by MAS, often not part of a bank. Some offer a CDP account option for SGX shares and a custodian account for overseas markets. Others put everything, SGX shares included, into a custodian account to keep fees down.
These brokers often charge less than bank-linked ones, and because the entity you deal with is licensed in Singapore, the MAS rules on keeping client assets apart from the firm's own apply to it. The trade-off is that the custody arrangement varies from broker to broker and sometimes from market to market within the same broker. One app can hold your SGX shares in CDP and your US shares with a custodian in another country. You have to read which is which.
The third type is a large broker that serves customers in many countries. These firms are often the cheapest for US trades, offer the widest choice of markets, and let you hold several currencies in one account.
The catch is the one Rachel found. The company whose logo is on the app is often the parent. Your account may be booked with a Singapore subsidiary, a US entity, or an entity in a third country, depending on when you signed up and where you live. That entity decides which regulator supervises your account and which protection scheme, if any, covers you. Lesson 1.3, What happens to your shares if your broker fails, goes through those schemes.
None of this makes an international broker a bad choice. It means the cheapest commission tells you little until you know who you are actually dealing with.
Here is the comparison that replaces "which one is cheapest":
Custody: are your shares in your own name at CDP, or in a nominee or custodian account, and where is that custodian? Licensing entity: which exact company holds your account, and which regulator licenses it? All-in costs: commission, platform fees, custody fees, and the FX spread on every conversion, added together. Markets: which exchanges you can trade, and whether you can hold US dollars or must convert each time. Transfer out: can you move your shares to another broker, and what does it cost?
The last one gets skipped most often. If you ever lose confidence in a broker, transferring your holdings out keeps them invested. Without a transfer route you would have to sell, convert back to Singapore dollars and buy again elsewhere, paying spreads and commissions twice and maybe selling at a bad moment.
When Hakim filled in the five rows for his bank brokerage, the commission was higher than the app's, but the bigger difference was the exchange rate. Rachel's broker was cheap on every cost row, and her shares were held by a custodian in the US through an entity licensed outside Singapore. Neither of them had to switch. Both now knew what they were paying for.
Fees and services change often, so the figures you collect today are a snapshot. Take them from each broker's own fee schedule and account agreement, not from a comparison site or a referral post.
In the activity you will put one broker of each type side by side. Pick ones you could realistically use, and leave a cell blank with a question mark when the website does not answer it. A blank is useful information about the broker.
Build a three-column comparison of one broker of each type you could use, filling in custody, licensing entity, commission and FX conversion method.
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