You will be able to compare bank brokerages, traditional brokers and app-based brokers on fees and account type.
Nadia is 28 and works as a quantity surveyor in Jurong East. She has decided this is the year she buys her first ETF, and she has three tabs open: her bank's online brokerage, a broker her uncle has used for twenty years, and an app she keeps seeing in ads on the MRT. All three say they let her trade on SGX. Their fee pages look nothing alike.
That's the usual starting point. Brokers for SGX trades fall into three rough groups, and each group makes its money in a slightly different way. Once you see the pattern, any fee page gets easier to read.
Bank-linked brokerages are run by, or tied to, a bank you may already use. Their big draw is funding. Money can move from your savings account to pay for a trade with little effort, and many offer CDP-linked accounts, so your shares land in your own name. The catch is often price. Commission at a bank brokerage can be higher than at an app, especially once a minimum fee kicks in.
Traditional brokers have been around the longest. Many give you a trading representative you can call, research reports, and a choice of CDP-linked or custodian accounts. Some charge more for an order placed by phone than for one placed online. If you want a person to talk to, this is where you find one, and you pay for that person somewhere in the fees.
App-based brokers are the newest group. They tend to charge low commission, sometimes very low, and the app is built for buying from your phone in a few taps. Most of them hold your shares in custody, in the broker's or a nominee's name, as lesson 1.1, CDP or custodian: who actually holds your shares, explained. Some make part of their money from other charges instead, such as currency conversion, platform fees or fees on dividends.
No group is always the cheap one. Prices vary inside each group, they change often, and the cheapest headline rate can hide the dearest extras. So instead of hunting for a winner, learn to read any fee page until you can say what one trade would really cost.
Most brokers quote commission as a percentage of the trade, with a minimum charge per trade. On a big order the percentage decides what you pay; on a small one the minimum does.
Take a made-up broker that charges 0.12% with a minimum of S$10 per trade. These figures are invented for the example. On a S$500 order, 0.12% works out to 60 cents, which is under the minimum, so you pay S$10. That's 2% of your money gone before the fund has moved. The percentage only starts to matter once an order passes about S$8,333, which is S$10 divided by 0.12%.
A second made-up broker charges a flat S$1.50 a trade. Same S$500 order: 0.3%. When you invest a few hundred dollars at a time, the minimum fee usually decides more than the headline percentage ever will, so it's the first number to look for.
Commission is the part brokers advertise. The full cost of owning an ETF through a broker has other parts, and they sit on the fee page, in a separate fee schedule, or only on your contract note.
Exchange and clearing fees: SGX charges these on each trade and brokers pass them on, usually with GST added to the fees. Custody fees: some custodian accounts charge a monthly or yearly fee just to hold your shares. Platform or inactivity fees: a monthly charge for using the platform, or for not trading. Dividend and corporate action fees: a charge each time the broker collects a dividend or handles a rights issue for you. Currency conversion: if you pay in one currency and the fund trades in another, the rate you get includes a margin for the broker.
For an SGX ETF bought in Singapore dollars, the last item may not apply at all. Some SGX funds also trade in US dollars, though, so check the currency of the exact counter you buy. Conversion costs matter far more when you buy on overseas exchanges, which Investing in US and global markets from Singapore covers in lesson 2.1, Where the FX cost hides in a US trade.
A broker with low commission and a custody fee can cost more over a year than one with higher commission and nothing else. The only way to know is to add it up for the way you'll actually invest.
Nadia plans to put in about S$500 a month. With the made-up S$10 minimum, twelve monthly orders cost S$120 a year, which is 2% of the S$6,000 she puts in. The made-up flat S$1.50 broker comes to S$18 a year. That gap looks like the end of the argument, until she checks what each account type gives up. Lesson 1.4, Compare two brokers on one sheet, puts both sides on paper.
When you read a fee page, look for the full fee schedule, sometimes called a tariff or a charges table. If the page says commission starts "from" a price, find out which accounts or order sizes get that price. If something isn't clear, ask the broker in writing and keep the reply.
Pick two brokers you could realistically open, ideally from two different groups. That way the comparison you start now shows a real trade-off, and the next two lessons have something to test.
Pick two brokers you could use and write down each one's commission, minimum fee, account type and any other charges from their published fee pages.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).