Dividend withholding tax of LSE-listed ETF in Saxo

After I consolidated my ETF holdings to Saxo in June, the first dividend from my ETF in London Stock Exchange was declared in my Saxo account in July. But wait, how come they were taxed at 20%? They were not taxed at all when I held the ETF in POEMS. After I have sent an email to Saxo, the withheld tax was refunded to me before the pay date in August.

Round Two

The second dividend was declared in October. Again, it was taxed at 20%! After a few emails to chase for the refund, it was credited into my Saxo account after the pay date.

Transfer Again?

The ETF pays dividend four times a year. It is going to be a pain if I need to email for tax refund for every dividend payout. And if Saxo decides not to refund withholding tax (e.g. change in custodian structure), it may be time to do another account transfer, sigh…

Cash withdrawal and deposit with two brokers

Just to record my experience in cash withdrawal from optionsXpress (OX) and cash deposit to Saxo Capital Markets (Saxo).

Cash Withdrawal from OX

Prologue

Before I requested for withdrawal, I have noticed my name in OX was spelled in the reverse order, so my name on the cheque issued by OX would be different from my UOB bank account name. I am not sure if the bank will accept such cheque.

I wrote to OX to find out how I can change my account name. The reply was to write them request in a letter to change the account name; and to speed up things, I could scan and email the letter. So I wrote the letter, print, sign, scan and finally email to OX. Within a week, the account name was changed according to my request. I was ready to request for a withdrawal by cheque.

Withdrawal

I login to make the request but forgot the 4-digit PIN required on the withdrawal page. I went to the helpedesk chat room to reset my PIN and finally made the withdrawal. Here is the time line:

• Sep 3: Submitted withdrawal request.
• A week after Sep 3: Received the USD cheque.
• Sep 11: Deposited the cheque into the deposit box at UOB bank. Wrote my name, account number and contact number at the back of the cheuqe.
• Sep 15: Received a receipt by post for the deposit of the USD cheque. 
• Oct 10: The money is deposited into my SGD savings account. 
• Few days after Oct 10: I received a credit advice (below) that gave the details of the commission and conversion rate. 

Credit Advice

Cheque amount	USD 74.12
Less: Correspondent bank agent commission	USD 15.00
Less: Correspondent bank charges	USD   0.00
Converted @ 1.4760000	SGD 87.26
Less: Handling commission	SGD 10.00
Less: Telex charge	SGD   0.00
Less: Postage	SGD   5.00
Amount credited	SGD 72.26

I am OK with the time taken to withdraw and cash in the cheque, but the commissions are just too high.

Cash Deposit to Saxo Capital Markets

• Day 1: Issued a SGD personal cheque that bears my name on the front surface. Wrote my Saxo account number and login ID on the back of the cheque. Sent the cheque to Saxo by post; attn to my broker.
• Day 2: My broker SMS me that the cheque was received and would be deposited in two days.
• Day 4: The money was deposited into my cash account and ready for trading.

Done!

Consolidated my ETF holdings

Last month, as planned in my previous post, I transferred part of my ETF holdings to Saxo. My ETFs are now held in the accounts below.

• DBS Vickers Securities
  • Vanguard Total Stock Market ETF (US)
  • ABF Pan Asia Bond Index ETF (HK)
• Saxo Capital Markets Singapore
  • iShares DJ STOXX 50 ETF (UK)
  • Vanguard Total Stock Market ETF (US)
  • Vanguard Emerging Market ETF (US)

I will use Saxo for my subsequent ETF purchase. ETF in DBS Vickers Securities will remain as it is to save transfer fee.

How long did it take to complete the transfer? After I have authorized both parties (one for transfer-out, one for transfer-in), it took about ten working days. Remember to ask both parties for forms and instruction to authorize both parties to do the transfer. The transfer from optionsXpress to Saxo was delayed because I did not know I also need to inform the party who will do the transfer-out of shares.

Consolidating my ETF holdings

My ETFs are held in several broker accounts, as shown below. This is because I have changed broker several times when searching for low cost broker for ETF in US, UK and HK exchanges.

• DBS Vickers Securities (formerly DBS Vickers Online)
  • Vanguard Total Stock Market ETF (US)
  • ABF Pan Asia Bond Index ETF (HK)
• POEMS
  • iShares DJ STOXX 50 ETF (UK)
• optionsXpress
  • Vanguard Total Stock Market ETF (US)
  • Vanguard Emerging Market ETF (US)

Each broker has its disadvantage. DBS Vickers Securities is the only broker I know in Singapore that does not charge custodian fee for US stocks, but its commission is higher than others. optionsXpress, which started its business in Singapore later, charges less commission than DBSVickersOnline, but funding the account is a bit troublesome when I use bank draft from Custom House for its lower foreign exchange spread. Finally, POEMS charges custodian fee and dividend handling fee, though its UK trading commission is lower than others. So, it would be good if there is a broker that is easy to fund and with low commission to hold all my ETFs.

Recently, a friend mentioned consolidating his ETF to Saxo Capital Markets Singapore because of its low commission for UK market, zero custodian fee and zero dividend handling fee. I have explored this option before but put off the idea due to the minimum SGD15,000 requirement to open an account. Later I found out from Saxo customer service that I could transfer in stocks to meet the minimum SGD15,000 requirement. So I decide to consolidate my ETFs to Saxo. The advantages are:

1. Lower commission than POEMS for UK stocks.
2. Zero custodian fee and dividend handling fee as compared with POEMS.
3. Ease of funding: you can fund the account by SGD cheque. Trade done in foreign currency are converted using the current spot rate plus/minus 0.5%. This is close to Custom House rate and lower than banks.

As transferring of stocks from one broker to another incurs fee, I plan to transfer my ETFs only from optionsXpress to get rid of the funding headache, and from POEMS to get rid of the high commission, custodian fee and dividend handling fee. I will leave the ETFs in DBS Vickers Securities because they do not incur on-going custodian fee.

The transfer of my ETFs to Saxo is in progress. I will post update when they are done, so stay tuned.