What Is a Brokerage Account and How to Set One Up

For Singaporeans looking to invest in the stock market and beyond, a brokerage account is your gateway.

A brokerage account is used to provide you with the means to buy and sell a variety of investment products. This includes stocks, Exchange-Traded Funds (ETFs), Real Estate Investment Trusts (REITs), and bonds, all of which can be listed on the Singapore Exchange (SGX) or on international exchanges.

When it comes to securities traded on the SGX, it's important to understand the role of the Central Depository (CDP). The CDP acts as the central securities depository for Singapore, holding these securities electronically on behalf of investors. This streamlines the clearing and settlement process, making trading more efficient. It's also crucial to clarify that when you invest through a brokerage account, you directly own the securities. The brokerage firm acts as an intermediary, executing your buy and sell orders.

As for the terms associated with a brokerage account, it’s important to understand that there are subtle differences in their definitions. A "brokerage account" is the general term for an account held with a brokerage firm for investing. A "trading account" might emphasise the account's use for active trading and contains securities, cash or other holdings. Meanwhile, a "custodian account" or “nominee account” specifically refers to an account where the broker holds the securities for you, but in Singapore, the CDP plays this role for SGX-listed securities.

What individual brokerage accounts can offer is a range of advantages for investors, from accessing diverse investment opportunities to providing flexibility in managing your portfolio.

• Investment Access: Brokerage accounts provide access to a wide array of investment options. You can trade securities on the SGX and also tap into global markets such as the US New York Stock Exchange, Hong Kong Stock Exchange (HKEX), and London Stock Exchange (LSE). This allows you to diversify your portfolio across different economies and industries.

• No Caps or Limits: Unlike schemes like the Central Provident Fund (CPF) or the Supplementary Retirement Scheme (SRS), brokerage accounts generally do not impose contribution limits. This means you have the freedom to invest as much or as little as your financial situation allows.

• Liquidity and Flexibility: Brokerage accounts offer a high degree of liquidity. You can typically sell your investments whenever the market is open, providing relatively quick access to your capital. This contrasts with investments that may have lock-in periods or penalties for early withdrawal. However, it's important to remember that the speed of accessing your funds after a sale can vary depending on settlement times.

• Platform Variety: Investors can choose from various platforms, including those offered by traditional banks like DBS and OCBC or online brokers such as Moomoo, Tiger Brokers, Syfe Trade, and Saxo Markets. This variety allows you to select a platform that aligns with your individual needs and investment style.

• Educational and Tooling Benefits: Many brokerage platforms go beyond simply facilitating trades. They also offer valuable educational resources and analytical tools to help you make informed investment decisions. These can include market data, charting tools, company research, and investment insights. Some platforms even provide tutorials and webinars to help you learn about investing.

>> Best brokerage accounts for online stock trading

You typically fund your brokerage account through convenient methods like instant deposit via direct debit authorisation, bank transfers, Fast And Secure Transfers (FAST), General Interbank Recurring Order (GIRO), and telegraphic transfer (TT). In some cases, you might also use payment platforms like Wise and BigPay to transfer funds from overseas.

When you're ready to trade, you'll place an order through your brokerage platform. There are a few common order types to choose from. A market order is an instruction to execute the trade immediately at whatever the best current market price is. If you want more control over the price, you can use a limit order, which lets you specify the maximum price you're willing to pay when buying or the minimum price you'll accept when selling. A stop limit order is a conditional order that only becomes a limit order once the security's price reaches a certain point, known as the stop price.

After a trade is executed, there's a settlement period before the securities and funds are officially exchanged. For trades on the SGX1, the standard settlement cycle is T+2, meaning the settlement occurs two business days after the trade date. Settlement cycles can vary for trades on foreign exchanges.

For investors trading SGX-listed securities, CDP plays a key role. How it works is that the CDP holds these securities electronically in your name. This system simplifies ownership tracking and facilitates efficient trading. In contrast, some brokerage accounts, often called nominee accounts, hold your securities directly with the broker rather than through the CDP.

Established banks in Singapore have brokerage arms, offering a full suite of financial services. Examples include DBS Vickers, OCBC Securities, and UOB Kay Hian. 

Meanwhile, online-only/custodian brokers operate primarily online, offering a more streamlined and often cost-effective way to trade. Examples include Moomoo, Tiger Brokers, Saxo Markets, and Syfe Trade. Lastly, robo-advisors like Endowus and StashAway offer automated investment management based on your risk tolerance and financial goals.

As for opening brokerage accounts, Singaporean investors can mainly select from two types of brokerage accounts.

Online brokerage account

Digital platforms commonly offer online brokerage accounts, which give you the ability to buy and sell investments directly through a website or mobile app. This type of account often appeals to self-directed investors who are comfortable making their own investment decisions and are looking for lower trading costs.

>> Best brokerage accounts for online stock trading

Managed brokerage account

In contrast, a managed brokerage account involves having a professional investment manager make investment decisions on your behalf. This option might be suitable for investors who prefer a hands-off approach or lack the time or expertise to manage their own portfolios. However, managed accounts usually come with higher fees compared to online brokerage accounts.

>> Best robo-advisors in Singapore: Top picks for 2025

Opening a brokerage account2 in Singapore involves a relatively straightforward process. 

Generally, you need to be 18 years or older to open a brokerage account, with eligibility extending to Singaporean citizens, PRs, and foreigners (with the necessary documentation).

If you plan to trade stocks listed on the SGX under your own name, you'll need a CDP account. This is where your SGX-traded securities will be held. If planning to buy overseas-listed securities, you’ll need a nominee account.

Next is to select a brokerage firm that suits your investment needs. Consider factors such as access to specific markets, commission fees and other charges, and trading platform features and tools to help you decide.

Most brokerages in Singapore offer online applications for convenience. Required documents typically include NRIC for Singaporeans and PRs or a passport for foreigners, the completed CDP linkage form, and supporting documents that show your name and mailing address, like utility bills and account statements from financial institutions.

Once your application is approved, you'll need to deposit funds into your brokerage account. Common methods include FAST and linking your existing bank account. After the funds are transferred, you're now ready to place your first buy or sell order. Make sure to familiarise yourself with the brokerage platform's user interface to prepare yourself for trading and managing your investments effectively. 

Also, keep an eye out for new user promotions offered by brokerage firms in Singapore. These may include commission fee waivers, vouchers, cash rebates, and more to help kickstart your investing journey.

In Singapore, the tax landscape offers some advantages for investors. For instance, there's no capital gains tax3, which means any profits you make from selling assets like stocks or ETFs, whether they're listed locally or overseas, are generally not subject to taxation.

However, when it comes to dividends, the rules differ. Dividends from Singaporean companies are typically tax-free4. However, dividends from foreign companies may be subject to withholding tax in their respective countries. To illustrate, dividends from US companies often face a 30% withholding tax since there is no tax treaty between the US and Singapore. In other words, if you earn US$100 in dividends from US stocks or investments, you'll generally only receive US$70 after the deduction of withholding taxes. Similarly, dividends from Hong Kong-listed companies are also subject to withholding tax, with 10% for H-shares or companies incorporated in mainland China and listed for trading on the Hong Kong stock market.

Regarding other forms of income, interest earned by individuals in Singapore, such as from bond coupons, is generally not taxed. Finally, it's worth noting that the 9% Goods and Services Tax (GST)5 may apply to certain fees charged by your brokerage firm. Always review your brokerage's fee breakdown to determine which fees are subject to GST so you can accurately factor these costs into your investment calculations.

While both brokerage accounts and retirement accounts are investment vehicles, they serve different purposes and have distinct characteristics.

• Central Provident Fund Investment Scheme (CPFIS): This allows CPF members to invest funds from their Ordinary Account (OA) and Special Account (SA) savings in a range of approved investment products6. These products are carefully selected to help CPF members grow their retirement nest egg. However, unlike a brokerage account, CPFIS investments are subject to specific regulations and restrictions, as the primary goal is to provide for retirement.

• Supplementary Retirement Scheme (SRS): This is a voluntary savings scheme designed to encourage individuals to save for retirement. Similar to a brokerage account, SRS funds can be used for investment. However, a key difference is that contributions to the SRS are eligible for tax relief, offering a significant incentive for retirement savings. There are also specific rules governing when and how SRS funds can be withdrawn.

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