Stock beginner guide – Open a broker account

Part 4

Now, you have learned the basic and understand the fundamental concept of stock. You want to start buying stock, but how?

In Singapore, the stock exchange is SGX. Stock listed and traded on a stock exchange. It is a common platform to enable investor to buy/sell stock.

First, open a CDP account. CDP stands for Central Depository. In the early days, investors would receive a physical certificate on company share they hold. This has been transformed into a paperless way by having CDP to keep track of the share you own.

After that, you need to open a broker account. You can go to individual broker website to know the details of account opening. Generally, there are two types of account. You can choose to have a broker to service you or open an online trading account. The broker account would have to link to your CDP account.

Personal broker – More personalized service and broker can advise you on the investment decision. The minimum brokerage charge is higher, at about $40.
Online trading – Basically, it is a DIY method to buy/sell on internet. You would use user name and password to log on to online trading account to buy/sell stock. The minimum charge is about 25.

You can check whether the broker would help you to open the CDP account at the same time. Then, step 1 CDP account opening can be skipped. During the broker account opening, you can link the broker account to bank account via EPS (Electronic Payment for Share). This would allow you to pay the broker through bank account.

Here is a list of broker available (not an exhaustive list).

Lim & Tan
Philip
Kim Eng
UOB Kayhian
DBS Vicker
OCBC Securities
CIMB GK

Example online trading charge:
Minimum $25
First 50k 0.28%
Next 50k 0.22%
100k onwards 0.18%

In a typical transaction, you instruct the broker to help you buy/sell a stock. You pay/receive the money to/from broker. Once the transaction is cleared, your CDP account balance is updated with latest holding. You can refer to SGX website for more information ww.sgx.com

After the account opening, you are ready to buy/sell stock.

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