Home Investment Investing Knowledge StanChart Raises the Bar and Lowers Trading Fees

StanChart Raises the Bar and Lowers Trading Fees

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In what is perhaps the most significant move recently in the Singapore stock brokerage industry, Standard Chartered Bank (SCB) has introduced its online trading service and set a new benchmark in trading fees. What's the catch?

Among the local banks, OCBC and DBS have long embedded their online trading portal within their internet banking platform. Up to now, DBS offers the lowest commission of 0.18% for "cash upfront" buy trades via internet banking.

SCB is at least 1 year late in introducing an integrated banking and trading platform, but looks to have side-stepped the competition with a set of attractive brokerage fees.

Trading Fees

For instance, SCB's brokerage fees for trading in the Singapore market is just 0.2% of the contract value for regular (non-priority) customers, with no minimum charge. This is about 27% lower than the current industry benchmark of 0.275% (which is also typically subject to a minimum charge of $25).

For the US market, the commission is not as compelling at 0.25% (about 17% lower than the usual 0.3%), but SCB does not appear to charge a custodial fee (which is often $2 per month per counter at brokerages such as Philip and OCBC).

Accessible Markets

While not as comprehensive as other brokerages, SCB does offer access to 14 exchanges in 10 of the largest markets globally (Malaysia's KLSE is the notable exception). Besides stocks, securities quoted on these stock exchanges (e.g. ETFs) are also available to be traded via SCB's platform. The full list of markets and brokerage commissions are as follows.

Source: SCB

Features

SCB's platform supports stop-loss orders, but its feature set is otherwise similar to other internet trading platforms in Singapore.

A key difference is that short-selling is not allowed by SCB. More importantly, SCB does not appear to support "contra" trading (i.e. trade-first pay-later) that is popular in Singapore. It is thus similar to the "cash upfront" system offered by DBS, in which a trader has to deposit funds with SCB in order to establish a "Purchasing Power".

As explained by SCB, "available Purchasing Power is the available funds you can use to purchase securities...taking into account available cash balance in your settlement account and considering any monies pending settlement.."

Conclusion

With SGX's move to reduce the bid-size for penny stocks from 4 Jul 2011, SCB's new platform appears to be well-timed to take advantage of the expected increased in participation by retail investors. However, the reduced brokerage fee is apparently not applicable to "contra" trades, thus limiting its appeal.

 

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Last Updated ( Sunday, 05 June 2011 04:20 )  

Comments  

 
0 #3 Restaurant bars 2014-02-13 06:06
Nice information, There is obviously a lot. Your points are very valuable and knowledgeable. Thanks for sharing this great blog with us.
 
 
0 #2 2011-10-05 14:49
Applied, was told the account will be ready in one week, but NOT the case after 10 days; called them, say need to check with the branch and let me know, then no answer again......called again, now say will take 10-14 days....unbelievable!!! ! The worst bank I have dealt with in Singapore!!!! Maybe cos the one who handled my case was an Indian guy...very very upset & disappointed.

Also, their platform is the worst I have seen. Cannot find where to apply for online trading, cannot find the portal for trading easily either. It's deeply buried and misled. Terrible impression, still cannot believe this is the kind of service a reputable bank can provide!!
 
 
+2 #1 2011-06-24 01:37
What consumers need to know is that your shares bought under this scheme is keep under Standard Chartered Nominees, instead of CDP.

Implication 1: you cannot vote directly at AGMs

Implication 2: you are stuck with selling your shares with SCB, unless you are willing to pay to transfer your shares back to CDP.

However, for small investors, the no minimum commissions more than make up for this two drawbacks.
 
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