From commission fees to custodian fees and GST, what other costs do you have to consider when making trades on the stock market? Here’s a look at the brokerage fees and market-level fees that you could incur.
Thanks to the new investment platforms that have entered the Singapore market, such as moomoo and Tiger Brokers, we no longer have to make do with expensive fees charged by local brokerages, especially for trading overseas stocks.
Fees immediately eat into our profits. The lower the fees, the greater returns you stand to gain. Hence, a prudent investor would hunt for an investment platform that offers competitive fees and attractive promotions.
However, there’s also no free lunch in the world. You simply don’t find ‘free’ trades available, although the promotions offered by some brokerages do cut it pretty close. Here are some fees you could incur when you invest in stocks.
Part 1: The fees everyone looks out for
These fees will definitely be incurred when you make a trade, regardless of the market you’re trading on. These fees also tend to make up the highest percentage of your total fees.
#1 Commission fee
The commission fee, charged as a percentage of your trade, is the fee that your brokerage charges you for the trade you execute. This percentage can vary depending on the market you’re trading in and you could also enjoy lower fees if you trade larger amounts.
The commission fees tend to be lower for brokerages that act as custodians. Brokerages that are CDP-linked tend to have higher commission fees.
How much this fee typically is:
- Custodian: 0.08% – 0.25%
- CDP-linked: 0.08% – 0.28%
Newer platforms in Singapore such as Interactive Brokers, moomoo by Futu SG and Tiger Brokers are the ones currently offering the lowest commission fees.
#2 Minimum commission fee
The minimum commission fee refers to the minimum amount you will have to pay the brokerage for your trade.
For example, if your commission fee is 0.08% and you’re trading 1,000 lots of a S$10 share, your commission fee would be S$8. If the minimum commission fee is S$10, you’ll have to pay the brokerage S$10 instead of just S$8. On the flipside, if your commission fee for that same trade is 0.12%, the commission fees you pay will be S$12, which is more than the minimum required.
How much this minimum fee typically is:
- Custodian: S$0 – S$28
- CDP-linked: S$10 – S$25
Part 2: Miscellaneous fees charged by some brokerages
For the fees listed in this section, they might be charged by some investment platforms, but not all. In some cases, they might only be charged by a select one or two platforms.
Regardless of the market you trade on, here are some of the charges you could incur when using a brokerage account:
#1 Custody fee
Many brokerages act as custodians of the stock you purchase, with the exception of CDP-linked brokerages that transfer the Singapore stocks you purchase into your CDP account. By helping you to hold these stocks in the account you have with them, some of these brokerages charge a custody fee that is usually a percentage or a flat rate.
For example, Saxo charges an annual custody fee of up to 0.12% for accounts with Stocks, ETFs/ETCs or Bond positions (with the exception of SGX stocks and ETFs), while Maybank Kim Eng and POEMS charge a foreign custody fee of S$2 per counter per month, subject to a maximum of S$150 per quarter.
#2 Platform fee
When you use an investment platform, some platforms charge a platform fee. You can think of it as the cost of using their platform.
For example, moomoo charges a platform fee that varies depending on the market you trade on — US$0.005 per share with a minimum of US$1 per order for US stocks, HK$15 per order for Hong Kong stocks and 0.03% of the transaction amount with a minimum of S$1.50 for Singapore stocks. FSMOne also charges 0.05% to 0.0875% in platform fees per quarter for funds on their platform.
Some robo-advisors such as AutoWealth charge a platform fee while offering competitive management fees.
#3 Maintenance fee
Similar to a platform fee, an investment platform like Interactive Brokers (IBKR) charges a maintenance fee instead.
IBKR’s maintenance fee: Up to US$10 per month (less commission paid that month)
What this also means is that you can avoid having to pay this maintenance fee as long as you pay US$10 worth of commissions that month, be it through executing more trades or trading a larger quantum.
#4 Inactivity fee
If you’re not an active trader, one fee to look out for would be the inactivity fee. This is a fee (typically a flat fee) charged when your account is deemed as inactive — if you haven’t made any trades for a specified number of months or years.
For example, IG charges a monthly fee of S$25 after 24 months of inactivity.
So if you’re not using an investment platform that you have open, it’s best to close the account in order to avoid the inactivity fee.
#5 Deposit or withdrawal fees
There could be fees charged when you make a deposit or withdrawal from your brokerage account. This is especially so if you were to deposit or withdraw in a currency that isn’t the home currency.
It would also depend on the method in which you’re funding the account. For example, Tiger Brokers states that deposits or withdrawals via telegraphic transfers would cost about US$25.
As a general rule of thumb, here in Singapore, if you do a FAST transfer, PayNow transfer or bank transfer, there are typically no fees charged. Do check the instructions for deposits and withdrawals on the platform to find details on the funding methods as well as potential costs you could incur.
Part 3: Market level fees you can’t escape from
If you trade Singapore stocks, here are the market fees to take note of:
#1 Clearing fee (for Singapore stocks)
When you trade Singapore stocks, you have to fork out a clearing fee of 0.0325% of the traded value. However, this clearing fee charged by brokers could sometimes differ between institutional and retail investors.
#2 SGX Trading fee (for Singapore stocks)
Besides the clearing fee, you’ll also have to pay a small trading fee of 0.0075% of the traded value.
This trading fee is compulsory regardless of which brokerage platform you choose to trade on.
There’s just one special case: The clearing fees and trading fees for money market exchange traded funds are only 0.0001% of traded value.
#3 Goods and services tax (GST)
Yes, your stock trades are also subject to GST. However, this applies to the commission fees, clearing fees and SGX trading access fees only. This means that the GST is charged on the fees you pay and not on your entire trade value. The GST in Singapore is currently 7%.
To find out how much fees you’ll incur, you can use this handy SGX Trade Calculator to help you out.
If you trade overseas stocks, these are the market fees you have to watch out for:
#1 Exchange/trading fee
Each market has its own exchange/trading fees. For example, the trading fee for stocks on the Singapore Exchange is 0.0075% of the traded value.
#2 Transaction levy
There could also be a transaction levy imposed on top of the trading fee. For example, trades on the Hong Kong Exchange incur a trading fee of 0.005% of the transaction amount, with an additional 0.0027% of the transaction amount charged as the transaction levy.
#3 Stamp duty
Some countries charge stamp duty for your trades. These countries include Hong Kong, Malaysia and China. For example, stock trades on the Hong Kong Exchange incur a stamp duty of HK$1.00 per HK$1,000.00.
#4 Goods and services tax (GST)
Each country (not just Singapore) also has their own GST policy. For example, if you were to trade Malaysia stocks, all commission fees will incur a 6% GST charge, imposed by Malaysia on intermediary brokerages.
Some countries might also term this as VAT tax or sales tax.
#5 Withholding tax (for overseas stock dividends)
Just like how we pay taxes for the income we earn, the dividends we receive from our stock investments could also be taxed. Here in Singapore, if you purchase stocks on the SGX, your dividends are not taxed. However, if you purchase US stocks that give you dividends, those dividends are subject to withholding tax.
This withholding tax is currently 30% for the US, 0% for Hong Kong, 10% for China, 15% for Australia and 15% for Japan.
#6 Capital gains tax
Similar to withholding tax, your capital gains from the stock market could also be taxed. In Singapore, you need not report your capital gains from the sale of stocks as they’re not taxable.
However, other countries such as the USA, South Korea, Australia and Canada will tax you on the capital gains you make. For example, in South Korea, taxes of up to 25% will be imposed on annual capital gains exceeding 50 million South Korean won a year from 2023.
Now that you know all there is to know when it comes to fees, start purchasing your stocks with a brokerage account of your choice.
Read these next:
Tiger Brokers Review: Low Commissions And Attractive Sign-Up Promotions
moomoo Review: Low Cost Trades And A Free AAPL Share
Interactive Brokers (IBKR) Review: Pros, Cons and Why They’re So Popular
Best Brokerage Accounts To Start Your Investment Journey In Singapore
Guide To Opening A CDP Account And Tips On How To Use It
By Ching Sue Mae
A flat white, an adventure-filled travel and a good workout is her fuel. This Manchester United fan enjoys sharing knowledge on personal finance while chasing the dream of financial independence.