I opened Standard Chartered Bank (SCB) Online Trading in June, with settlement acounts in SGD, HKD, USD, EUR and GBP currency. I waited for another 3 weeks for the W8BEN form to be processed, so that I could start to use the USD settlement account.
The main attraction is that there is no minimum commission for trading in major stock exchanges around the world, so it is very good for small transaction, especially if you want to do monthly contribution into ETF. Read the Brokerage & Market Fees, FAQ and this post by hyom. Besides the questions raised n FAQ, I also gathered the following information by calling the online trading hotline at 1800 242 5333 (don’t call the general hotline as the officers are not equipped to answer online trading-related question).
- All shares are held in SCB.
- No monthly custodian fee.
- No dividend handing fee.
There are two other things to note: currency exchange rates and ETF listed in London Stock Exchange.
Currency exchange rates
I compared SCB currency exchange rates with that of Oanda.com for a random couple of days, see the spreadsheet below (or open the spreadsheet here). As you can see in the last column (Amount % Difference), HKD rate is consistently bad while others fluctuate. I have only transferred money to USD account and did so when the Amount % Difference is in the 0.5–0.6% range.
ETF listed in London Stock Exchange
According to London Stock Exchange (LSE) webpage on ETF, ETFs attract no stamp duty. The two brokers (POEMS and Saxo) that I have used to purchase ETFs in LSE follow this rule and did not charge stamp duty.
For SCB, you will have to pay the stamp duty of 0.50% on buy trades. I called up SCB, cited the webpage and asked if there was a mistake and whether stamp duty would be refunded if the transaction in LSE was a ETF. SCB said they would call back. Few days later, SCB called me and said all buy trades in LSE will attract stamp duty. Huh?
So how much commission in total (including stamp duty) will I be paying when I use SCB compared to Saxo? See the spreadsheet below or open the spreadsheet here. SCB is more expensive than Saxo when your trading amount is only slightly over $1000 ($1066.67 to be exact). This means SCB is only cheaper when you trade below $1066.67.
The ETFs and REIT shares that I use in my portfolio are listed Singapore exchange, US stock exchanges and London stock exchange.
- I am inclined to use SCB for transaction in Singapore exchange and US stock exchanges.
- I will continue to use Saxo for transaction in London stock exchange.
- For currency exchange, I am OK with the hassle of comparing the rate in SCB with Oanda.com each time before initiating the transfer.
I received this email from Saxo last week:
… the minimum commissions charged on stocks traded on the following exchanges will be lower from 1 May 2010:
- Euronext Amsterdam (AMS) from EUR 20 to EUR 12
- Euronext Brussels (BRU) from EUR 20 to EUR 12
- Euronext Lisbon (LISB) from EUR 20 to EUR 12
- Euronext Paris (PAR) from EUR 20 to EUR 12
- Frankfurt/Xetra Stock Exchange (FSE) from EUR 20 to EUR 12
- London International Exchange (LSE_INT) from USD 40 to USD 20
- London Stock Exchange (LSE_SETS) from GBP 15 to GBP 8
- Milano Stock Exchange (MIL) from EUR 20 to EUR 12
- OMX Helsinki (HSE) from EUR 20 to EUR 12
- Sistema De Interconexion Bursatil Espanol (SIBE) from EUR 20 to EUR 12
- Swiss Virt-X (VX) from CHF 30 to CHF 18
- Swiss Exchange (SWX) from CHF 30 to CHF 18
- Wiener Börse – Vienna Stock Exchange (VIE) from EUR 20 to EUR 12
Saxo Capital Markets will raise the minimum commissions charged on stocks traded on the OMX Copenhagen Stock Exchange (CSE) from DKK 19 to DKK 29.
The reduction of commission for London stock exchange is almost half. Great! Now I only need half of the previous investment amount to achieve the same ‘sales charge’.
With this low commission, I may also consider bond ETF in London stock exchange when I need to add to my global bond asset class. Currently I use unit trust fund for global bond asset class. Below are the global bond ETFs in London stock exchange that I may use:
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)
- iShares DJ STOXX 50 ETF (UK)
- 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:
- Lower commission than POEMS for UK stocks.
- Zero custodian fee and dividend handling fee as compared with POEMS.
- 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.
Recently I bought Lyxor Japan ETF in SGX which is denominated in USD. I use Lim&Tan broker to buy USD-denominated stocks because its minimum commission is lower at USD12.50. I would usually click the estimated commission link to check how much commission is payable before I submit my order. If I choose to settle the order in SGD, the minimum commission becomes SGD25. Given the current USD:SGD exchange rate, it is more expensive than the commission in USD. If I choose to settle the order in USD, and convert the total order value to SGD, which commission is applied?
I emailed Lim&Tan helpdesk to clarify and received their call on the same day. Below is Lim&Tan’s reply:
- Settle the order in SGD — minimum commission SGD25.00
- Settle the order in USD — minimum commission USD12.50
- Settle the order in USD, then call Lim&Tan within T+2 to convert total order value to SGD — minimum commission USD12.50 converted to SGD, which is currently about SGD17.
Of course, I use the third way to buy Lyxor ETF because the commission is cheaper.