You will be able to describe the main types of account for holding investments in Singapore.
Open one of your investment apps or its most recent statement, and look in the terms for the clause that names who holds your shares or fund units. Few investors could tell you where that clause is or what it says, and most of them never need to. The question becomes important if the provider shuts down, merges with another firm or is found to be operating without a licence. It also comes up in ordinary situations: moving your holdings elsewhere, collecting a dividend, or voting at a company's meeting.
Wei Ling, whom you first met in lesson 1.3, is in this position. Three years ago a friend suggested an investing app, and she signed up on her phone. The account is now worth S$7,500 (an invented figure). If you ask her who actually holds the shares inside it, she has no answer. It might be her, it might be the app, or it might be a bank somewhere.
If you own shares listed in Singapore, they are held in one of two ways: in a CDP account in your own name, or in a custodian account.
CDP is short for the Central Depository, which is run by the Singapore Exchange group. You still place trades through a broker, but CDP records the shares under your name. Statements arrive from CDP itself. Dividends are paid into whichever bank account you have linked, and notices of company meetings are sent to you. If you switch to a different broker, your shares stay where they are, since the old broker was never holding them.
In a custodian account (also called a nominee account), the broker holds the shares in its own name for you, or appoints a custodian to do so. The record of your ownership is kept in the broker's books instead of at CDP. The shares remain yours, but you see them only through the broker's statements and app, and dividends and meeting notices reach you via the broker. App-based brokers commonly use this setup. Shares listed outside Singapore are almost always held in a custodian account.
Both arrangements are legitimate. What separates them is where your ownership is recorded, and that affects fees, the way dividends reach you and how easily you can transfer your holdings. A firm that holds client assets must keep those assets apart from its own. Even so, if the broker fails, getting shares back from a custodian account can take longer. Shares held in your own CDP account never belonged to the broker to begin with. To know which type you have, look at the broker's terms.
Robo-advisors and unit trust platforms work on a different basis. What you hold there are units in funds. The platform has those units held by a custodian, typically a bank or a trust company, which keeps them separate from the platform's own money and keeps a record of which units are yours. Your statement lists how many units you have and their current value.
On a fund platform, your protection comes from the custody arrangement together with the platform's licence. You'll find both explained in its terms and disclosure documents. Before you invest, find the part that deals with how client assets are held, so you know who has your units and what would happen to them if the platform closed.
SRS and the CPF Investment Scheme both exist for retirement money, and each comes with its own set of rules.
SRS, the Supplementary Retirement Scheme, is optional. You open an account with one of the banks that act as SRS operators and contribute in cash. Those contributions can lower your income tax, but the relief is given in the Year of Assessment after the year you contribute, and only if you are a tax resident for that Year of Assessment. Inside SRS the money can go into a range of products, or it can stay as cash. It is intended for retirement. Taking money out before the statutory retirement age generally costs you a penalty, and the amount you withdraw is also taxed. Contribution caps, the tax treatment and the withdrawal rules are published on the IRAS and MAS websites, and because they change, look them up there.
Under the CPF Investment Scheme you can put part of your Ordinary Account savings into approved products, and in some cases part of your Special Account savings too. You can use it only after your balances pass amounts the CPF Board sets. Any gain or loss stays within CPF, and the money is still meant for housing and retirement. If your investments return less than the CPF interest those savings would have earned anyway, you have lost out. The current rules are on cpf.gov.sg. The course CPF Mastery: every account and the choices you control goes through the scheme in detail.
Whichever kind of account you are opening, check the firm offering it first. MAS keeps a Financial Institutions Directory on its website listing every firm it licenses or regulates, along with the activities each firm is permitted to carry out. It also keeps the MAS Investor Alert List, which names firms that may have been wrongly presented as licensed. Scam investment platforms often have polished, real-looking apps and dashboards, and a licence check is one of the few ways to separate them from genuine ones.
Go to the MAS Financial Institutions Directory on the MAS website. Search for the exact company name, since the brand name on the app may differ. Make sure the activity you are signing up for appears on that firm's licence. Look the firm up on the MAS Investor Alert List. Stop if the firm is on the alert list, or if you cannot find it in the directory.
Wei Ling goes back to her app and reads its terms. They state that her shares are held by a custodian in the broker's name. She then searches the MAS directory for the company that runs the app and finds it listed with a licence for dealing in securities. She writes both points down, and she can now answer the question that stumped her before: who holds her shares, and whether the firm is licensed.
You can do the same for every investment account you hold. Open each app or statement, and keep the MAS directory open in another tab.
List any investment accounts you have, what type each one is, and whether you have checked the provider on the MAS directory.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).