5 Simple Steps to Opening a CDP And Stock Brokerage Account In Singapore

A lot of talk about investing in stocks has been making the rounds, especially in these crazy and volatile economic times. Namely, that this uncertain period is a really compelling time to start buying into the stock market with a Central Depository (CDP) / Stock Brokerage Account. And you just might be able to make quick and easy profits!

Even before the Coronavirus-induced stock market crash in March 2020 and the subsequent rebound, the stock market has always been held up as a great way for normal people like you and I to make money quickly and effectively. However, what deters most people from stock investing, aside from the risks, is confusion about how they can join the scene.

It is slightly less straightforward than opening a savings account at your local bank or getting a fixed deposit. In summary, you will need to set up 2 separate accounts in order to trade in stocks:

• A CDP account to store your stock holdings; and
• A stock brokerage account to trade (i.e. buy or sell) stocks in the stock market

However, fret not – this article will aim to simplify the process, so you can start getting involved in the stock market!

Over the long term, returns from the stock market are higher than what you get from your bank’s savings accounts and fixed deposits. That being said, please note that investing in the stock market carries a lot of risk. Before making your first transaction, please ensure you fully understand what the different types of trades and technical terms mean. In-depth research into the company which you are attempting to trade is also strongly advised.

1. Ensure you have a Local Bank Account

Before starting, please note that only adults above 18, who are not undischarged bankrupts, are eligible to own stocks in Singapore. Also, do ensure that you have an existing account with a local bank which does Direct Crediting. These include only the following 7 banks:

• DBS / POSB
• OCBC
• UOB
• Maybank
• HSBC
• Standard Chartered Bank
• Citibank

2. Apply for a CDP Account

Before opening a brokerage account, you will need an individual CDP account. As its name suggests, the CDP serves as a ‘depository’ to store the stocks and bonds which you have bought. It is free to open and maintain a CDP account.

Aside from storing your personal stock holdings, your CDP account can also hold bond investments such as Singapore Savings Bonds and Singapore Government Securities.

Fill up the CDP application form

Since 2019, it is now possible to open a CDP account online in just 10-20 minutes! 

Altogether, there are 4 different options to apply for a CDP account:

Option (1): One way is to fill up a simple online form using SingPass’ MyInfo. This step is only available for Singaporean citizens and Singapore Permanent Residents (PRs).
Option (2): Another way is to fill up a slightly longer online form, which requires slightly more documents. This step is open to anyone eligible.
Option (3): The option to print out the application form and send it via mail, or in person, is also available.
Option (4): Finally, you can also approach a brokerage for assistance with opening both a CDP account and a stock brokerage account.

If you choose Option 4, you may jump straight to step 3 below on selecting a stock broker. Your selected brokerage will handle the entire application process for you.

a. Prepare Your Necessary Supporting Documents

If you are using the Option (1) to submit your CDP application, you would only need the following documents. This is because the SingPass system already contains some of your other personal particulars: 

• A Singapore bank account with one of the above mentioned local banks
• An image or document of your signature (Photographed or Scanned), for authentication purposes
• If you are tax-resident outside Singapore, you would also need to provide your Tax Identification Number (TIN). Also, you would need to provide your country of tax residency and for US citizens, a completed Form W-9.

If you are using Options (2) or (3) to submit your CDP application, then in addition to the above documents, you would also need 2 further supporting documents:

• Identification card (this is typically your NRIC, Passport, or SAF 11B)
• Either one of a bank, CPF, or IRAS statement issued within the past 3 months. Please note that the statement must contain your name and residential address, which must match the name and address you provide in the application form.

b. Mail or Deliver your Application

This step is only for those choosing Option (3) (mailing or delivering your application in-person).

Ensure that you complete and sign your application form, and prepare copies of ALL of the above supporting documents where applicable. Collate all of the above and mail them to:

The Central Depository (Pte) Ltd
11 North Buona Vista Drive
#06-07
The Metropolis Tower 2
Singapore 138589

Alternatively, you may submit your documents in person at the same address.

Please take note of the opening hours, and how to get there by bus or MRT from the SGX website.

3. Apply for a Stock Brokerage Account

After submission of the CDP application form, you should receive confirmation by mail within a few days. Once your CDP account is ready, you can then pick a brokerage firm to open a stock brokerage account!

Select a Brokerage Firm

There are a large number of brokerage firms that you can open a stock brokerage account with. These include the following:

• DBS Vickers
• UOB Kay Hian
• Maybank Kim Eng
• OCBC Securities
• Phillip Capital
• RHB Securities Singapore
• CIMB Securities
• iFAST Singapore
• KGI Securities
• Lim & Tan Securities

Do note there are generally two types of trading platforms.

The first kind is linked to a bank account, from which money is directly deducted when you execute a trade.

The second kind is a ‘cash upfront’ system, in which you will have to deposit a certain amount of cash with the broker before starting to trade.

The first kind is more flexible than the second, as you can ensure your money does not sit worthlessly in an account which is not generating interest. DBS Vickers, for example, offers both options, and charges lower fees for the second.

4. Consider Commission Fees & Foreign Market Access

Which brings us to the next point, on fees. While it is free to open and maintain a brokerage account, the brokerage firms charge slightly differing commission fees per trade. These commission fees are typically a small percentage of the traded amount (0.18% – 0.28%). For smaller trades, such as those in the thousands of dollars, there is usually a minimum quantum for the commission fee (for those held in CDP, typically S$25). Seedly has a recent article comparing the commission fees charged by the various brokerage firms.

Finally, the brokerage firms may differ on the variety of foreign stock markets it offers access to. For instance, DBS Vickers offers access to 5 other stock markets in addition to the Singapore market (SGX). Additionally, a DBS Vickers account holder may also apply to trade in the US stock market. UOB Kay Hian, meanwhile, offers access to 4 non-American foreign markets, including Bursa Malaysia. Thus, if there is a particular foreign stock market which you are keen to access, it is crucial to check the brokerage firm’s website to see if the firm offers access to that market.

5. Start Trading!

That’s it! You’re in the game now! However, please always be mindful and prudent of the risks involved in trading. And always remember to conduct your own research and analysis before diving into the stock market. Although the promise of making a quick profit may be tempting, the reverse – losing your entire fortune – is possible as well, if you do not do enough in-depth research prior to plunging into the market.

Conclusion

With this article laying out the simple steps to opening a CDP account and a stock brokerage account, we hope that you have a much clearer idea on how to start trading in the stock market. The process of opening both accounts in this online era is typically hassle-free. Perhaps the only issue which will require some consideration is selecting the brokerage firm with which to open your account.

If you’re completely new to investing, here are some investing basics for new investors. You may also be interested in investing in REITs in Singapore or investing in high-yield dividend stocks.

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