Complete Guide to Opening Your SGX CDP Account and Brokerage Accounts: Unlocking Singapore's Market

As an investor, owning and investing in stocks require two fundamental accounts: a Central Depository (CDP) account to store your shares and a brokerage account to facilitate your trades. 

The first step in your investment journey is opening a CDP account, which serves as the secure repository for your securities. Subsequently, you'll need a brokerage account to execute transactions and manage your investments effectively. When selecting a brokerage account, you'll encounter two primary types: CDP-linked and custodian accounts. 

In this article, we will explore the importance of CDP and brokerage accounts, conduct a comparative analysis between CDP and custodian accounts, and offer insights into key considerations, particularly focusing on fees, for small investors before selecting a brokerage.

What Is a CDP Account, and How Does It Work?

The CDP account, operated by the Singapore Stock Exchange (SGX), serves as a centralised platform offering integrated clearing, settlement, and depository services for customers involved in the Singapore stock market. In essence, stocks and bonds purchased within the Singapore stock market are securely held within the CDP account, establishing individuals as legal owners and shareholders of the respective companies. 

Functioning as a personal safe for stocks, a CDP account,, is indispensable for those aiming to purchase and own shares in Singapore. Every share acquired in a listed company through the open market is automatically deposited into the individual's CDP account, ensuring the security and integrity of their investments. Alternatively, investors who prefer not to hold their investments can choose a custodian account as an alternative option.

Custodian vs Central Depository (CDP) Account

When it comes to managing your investments, you'll encounter two primary options: CDP account and a Custodian account. Let’s look into the details of each of their pros and cons.

CDP account: Investors directly purchase stocks under their name, which are then credited into their CDP account. This ownership model also means that you own the shares and become shareholders of the respective companies. Notably, this arrangement is exclusively applicable for trades conducted on the Singapore Exchange (SGX).

Custodian account: In a Custodian account setup, stocks are acquired through a nominee account overseen by the brokerage firm. Consequently, the legal ownership of the stocks rests with the brokerage house, which holds the stocks on behalf of the investor. This arrangement offers a streamlined process for investors who may not wish to directly manage their investments or seek greater convenience in trading. 

Eligibility Criteria for Opening a CDP Account

To be eligible for a Central Depository (CDP) account, applicants must:

• Be at least 18 years old, ensuring they have reached the age of majority and are legally capable of entering into contracts.
• Not be an undischarged bankrupt, indicating financial stability and the ability to manage financial instruments responsibly.
• Hold a bank account with one of the designated banks: DBS/POSB, OCBC, Citibank, HSBC, Maybank, UOB, or Standard Chartered Bank. This is necessary for the Direct Crediting Service (DCS), which enables automatic crediting of cash distributions and dividends into the holder’s bank account.

Meeting these criteria enables individuals to engage in securities trading and manage their investments efficiently in Singapore

Opening a CDP Account - Self-serve or Assisted

Navigating the process of setting up a Central Depository (CDP) account online is straightforward, provided you meet the basic prerequisites. Opening a CDP account is free and here’s how:

1. Filling Out the Online Form

Since November 2019, the option to apply online has significantly simplified the process. Access the SGX website to start your application, which can be done in just 15 minutes using either MyInfo for expedited processing or a manual entry form.

2. Document Checklist

Prepare the necessary documentation beforehand to ensure a smooth application process. 

For Singapore Citizens/PRs Using MyInfo on Singpass:

• Singapore Bank Account
• Photographed/Scanned Copy of Signature
• Tax Identification Number (TIN), which is typically your NRIC number.

If You Have Tax Residency Outside Singapore:

• Country of Tax Residency
• Tax Identification Number (TIN)
• Completed Form-W9 (for U.S. tax residents)

Additionally, CDP account opening using MyInfo pulls specific information such as full name, IC number, email, mobile number, and residential address from MyInfo. If the information you wish to use for the account opening differs from what's recorded in MyInfo, you'll need to update it in MyInfo beforehand.

For Others (Including Malaysian Citizens and Other Nationalities) via Online Form:

A) For Singapore Citizens/PRs:

• NRIC, or
• Singapore Armed Forces ID, or
• Singapore Police ID with Passport.

B) For Malaysian Citizens:

• Malaysia IC, or
• Passport, or
• Work Pass.

C) For Other Nationalities:

• Passport
• Work Pass
• One of the following secondary support documents (dated within the past three months and containing the applicant’s name and residential address for verification):
• Bank statement from any Monetary Authority of Singapore (MAS) licensed banks
• Statement from Central Provident Fund (CPF)
• Statement from Inland Revenue Authority of Singapore (IRAS)

Regardless of nationality, all applicants must have:

• A Singapore Bank Account
• Photographed/Scanned Copy of Signature
• Tax Identification Number (TIN)

And if applicable, due to tax residency status outside Singapore:

• Country/Region of Tax Residency
• Tax Identification Number (TIN)
• Completed Form-W9.

3. Post-Application

After submitting your application, look out for a notification by post confirming the activation of your CDP account. With this account, you can then proceed to connect with local brokerage firms for your investment activities.

Brokerage Firm Applications: An Alternate Route

For a streamlined approach to opening a CDP account, consider enlisting a brokerage firm's help, which will provide and submit the necessary forms on your behalf, generally notifying you of your account's readiness within 10 business days, though be mindful that while the CDP account itself incurs no fees, brokerage-related trading or administrative fees may apply.

List of Brokerage Firms

Several brokerage firms in Singapore can facilitate the opening of a CDP account as part of their services. Some of these include:

• CIMB Securities
• DBS Vickers Securities
• iFAST Singapore
• KGI Securities
• Lim & Tan Securities
• Maybank Kim Eng
• OCBC Securities
• POEMS by PhillipCapital
• RHB Securities Singapore
• UOB Kay Hian

What Else You Can Do With Your CDP Account

Expanding the utility of your Central Depository (CDP) account beyond the mere holding of stocks can enhance your investment experience significantly. Here’s a guide on leveraging your CDP account for a comprehensive management and monitoring of your investments:

1. Monthly Transactions and Dividend Payouts

Your CDP account offers a streamlined view of dividends and transactions, presenting a clear picture of monthly activities without the clutter of regular bank transactions. To access this:

• Navigate to the ‘Payouts’ section within your portfolio, where you'll find detailed information on dividends, including:
• The date the dividend is payable.
• The quantity of stock units entitled to dividends.
• The total dividend amount you'll receive.
• The payment rate per unit held.

2. Consolidated View of Investments

One of the most significant benefits of a CDP account is the ability to link multiple brokerage accounts from various firms, providing a consolidated view of all your investments. This feature allows you to:

• Review all linked brokerage and bank accounts under your profile, including details like the firm name, account number, opening date, and the account's status (active or inactive).
• Keep track of dividends through your linked bank account details under the Direct Crediting Service (DCS).
• Opt-in for email or SMS notifications for real-time updates on market movements or statements concerning your account, ensuring you stay informed about critical developments.

3. Utilizing SGX Tools for Enhanced Investment Insights

The Singapore Exchange (SGX) offers a suite of tools designed to empower investors with data and insights for informed decision-making. These tools include:

• Market Updates: Stay abreast of the latest market trends, sector analyses, earnings reports, and other pivotal information. You can tailor these updates based on stock names, sectors, asset classes, or specific time frames to suit your investment strategy.
• Securities Filtering: Sort through securities by product type, such as REITs, Stocks, ETFs, SGS Bonds, Retail Bonds, Structured Warrants, and Business Trusts. This allows for the creation of a personalised watchlist encompassing a diverse range of investment products.
• Stock Screener: Leverage SGX’s stock screener to evaluate stocks based on various metrics like total revenue, market cap, yield, price-earnings ratio, sector, and return on equity, among others. This tool aids in identifying stocks that match your investment criteria.
• ETF Screener: Similarly, the ETF screener tool helps you navigate the ETF landscape by performance, turnover, dividend yield, expense ratio, and more. Whether you're looking for the top performers, gainers, or specific ETF characteristics, this tool can refine your search efficiently.

By embracing these capabilities, you can transform your CDP account from a mere repository of stocks into a dynamic platform for investment management and analysis, enhancing your strategy and potentially your returns.

What Brokerage Account to Use?

Now that you're equipped with a CDP account and ready to embark on your investment journey in the Singapore stock market, choosing the right CDP-linked brokerage account becomes crucial. These accounts not only connect you directly to the market but also influence the cost and flexibility of your trading activities.

Singapore’s online stock brokerages commonly offer cash accounts, which are ideal for investors looking to buy stocks without the need to arrange cash upfront or engage in 'contra' trading. In contra trading, you're allowed to sell the stock within a short period after buying it, typically before the payment is due on T+2 (Transaction Date plus two days), allowing you to potentially profit from short-term price movements without initially paying for the stock.

Key Features of Cash Accounts:

• No Upfront Cash Requirement: You're not required to have the cash upfront when you purchase stocks, providing significant flexibility, especially for short-term trading.
• Settlement on T+2 Basis: Payment for transactions is required within two days after the transaction date, a standard practice that aligns with global markets.
• Higher Commissions: The flexibility of cash accounts comes at a cost, with generally higher commission rates compared to other types of accounts. This is because the brokerage is taking on more risk by allowing transactions without upfront payment.

Let’s look at the comparison in price:

The comparison table suggests that the rates of these CDP-linked accounts’ rates are rather close to each other where all of them share the same minimum $25 commission fee and also the below trading fee:

• 0.275-0.28% (<$50k)
• 0.22% ($50k-$100k)
• 0.18% (>$100k).

As you weigh the importance of setting up a CDP account to kickstart your investment journey, remember that smart investing is about more than just choosing the right platform — it's also about maximizing growth and ensuring security with minimal costs. 

StashAway stands out by offering intelligent, personalized investment strategies that come with low fees, ensuring your portfolio is not only diversified but aligned with your financial aspirations. Embrace a smarter way to invest with StashAway, where innovation meets your financial goals efficiently.