CDP vs Custodian account: How Singapore investors can decide which to use

What happened?

If you are looking to start investing in Singapore, one of the first things you will need to do is to open up a stock trading account with a broker.

When it comes to opening a stock trading account, many investors have come to us to ask: how do I decide between a CDP and a custodian account? 

At Beansprout, this is one of the most common questions we receive from new investors. 

The question has also come up more often after China tightened controls on offshore brokers such as Moomoo, Tiger Brokers and Longbridge, leading some investors to ask what happens to their shares if a broker faces challenges.

In this article, I will explain the difference between a CDP account and a custodian account, the pros and cons of each structure, and how to decide which one better supports what you want to do in the Singapore market. 

What is a CDP account?

A Central Depository (CDP) account is operated by the Singapore Exchange (SGX), and acts as a secure storage for any stock listed on SGX that you own. 

Apart from Singapore-listed stocks, the CDP account also stores other investments that are listed on the SGX, such as Treasury bills (T-bills) and Singapore Savings Bonds (SSBs).

When you have a stock trading account that is linked to CDP, the stock you have purchased will be held directly under your name and stored in the CDP account. 

If you’re exploring low-cost online brokers that now support CDP trading, moomoo recently launched the ability to buy and sell SGX stocks directly through CDP.

You can read our full breakdown of how moomoo’s CDP linkage works here. 

What is a custodian account?

A custodian account is an account where your shares are held through your broker or the broker’s custodian arrangement. 

When your stock is traded via a custodian account, your ownership in the stock is held through the broker, which holds the shares on your behalf.

You remain the beneficial owner of the shares, but the shares are not held directly under your own name in CDP.

What is the difference between a CDP and a custodian account?

The key distinction between a CDP account and a custodian account lies in ownership. 

In a CDP account, the stocks are held directly under your name, giving you direct ownership and associated rights. 

In a custodian account, your stocks are held through the broker. 

To find the best CDP or custodian account, check out the guide to the best Singapore trading platform and brokerage account here.

What should investors consider when choosing between CDP and custodian accounts?

The CDP versus custodian account question is often framed as which one is better.

I find it more useful to ask a different question: what do you want to do in the Singapore market?

If you want direct ownership, shareholder rights, access to IPOs, Singapore Savings Bonds, T-bills and retail bonds, a CDP account may give you broader access from the start.

If your main priority is to start investing with lower costs and a simpler app experience, a custodian account may be sufficient, especially if you are buying a small number of Singapore stocks or ETFs through one broker.

The trade-off is that you may have to rely more on your broker for corporate actions, AGM participation and certain account administration matters.

What are the advantages of a CDP account compared to a custodian account?

#1 – Direct ownership of your Singapore shares

When you own a Singapore stock through a CDP account, the shares are held directly under your name and you will be a full-fledged stock owner with all the perks that come with it.

This gives you direct ownership and associated shareholder rights. 

In other words, you'll have the right to attend Annual General Meetings (AGMs) and vote on important matters affecting the company.

Also, you will be notified directly of any notifications such as rights issues, dividend reinvestment plans, rather than through your broker.

If you are using a custodian account, your stocks will be held through the broker. You may still be the beneficial owner, but you typically need to rely on your broker to process corporate actions, AGM attendance requests and voting instructions.

#2 – More peace of mind if the broker faces difficulty

In a CDP account, the shares are held directly under your name. 

If the broker you use runs into financial difficulty, your CDP-held shares are separate from the broker and can still be accessed through another CDP-linked broker. 

If you are using a custodian account and the broker faces financial difficulty, it may take some time to recover your assets even if the broker has taken precautions to safeguard your shares and ensure that they are segregated from the company's own funds and assets. 

#3 – Broader access to the Singapore market ecosystem

A CDP account is not just useful for Singapore-listed stocks.

It is also needed for investors who want to apply for Singapore IPOs, subscribe to Singapore Savings Bonds, participate in T-bill auctions using cash, or hold certain retail bonds such as the Astrea 8 and Astrea 9 PE bonds.

Some investors only realise this later, after they have already started investing through a custodian account.

If you want access to the full range of Singapore market products from the start, a CDP account may be useful even if you also use a custodian account for lower-cost trading.

#4 – Flexibility to change brokers

With your CDP account, you will not be tied to any one broker, so you can buy or sell shares through any broker you choose.

You can buy shares through one CDP-linked broker and sell them through another CDP-linked broker, as long as your CDP account is properly linked.

This can be helpful if you want to compare fees, service levels or platform features across brokers. 

However, do note that while you have the flexibility to change brokers, it may take time for your shares to be transferred between brokers and there may be transfer fees involved

#5 – Consolidated view of securities holdings

CDP issues a monthly account statement to detail your holdings and the dividends you’ve received.

Your CDP account can also hold Singapore Savings Bonds and T-bills. 

This can make it easier to track your Singapore holdings in one place, especially if you use more than one broker.

By linking them up with Singapore Financial Data Exchange (SGFinDex), you will be able to have a more complete picture of your portfolio and financial health. 

#6 - Participate in the Securities Borrowing and Lending programme

When your stocks are held in a CDP account, you can participate in securities lending and potentially earn a fee by lending out your stocks. 

What are the disadvantages of a CDP account compared to a custodian account?

The main downside of a CDP account is the higher commission fees. These fees can potentially erode the returns of your investments. 

These fees can add up, especially if you trade frequently or invest in smaller amounts.

By comparison, custodian accounts offered by digital brokers tend to have lower commissions.

This has made custodian accounts attractive to many beginners who want to start investing with smaller sums.

However, it is still worth checking the full fee schedule before choosing a broker.

Apart from commission fees, some brokers may charge platform fees, custody fees, corporate action fees, dividend handling fees or inactivity fees.

You can find out the full list of fees for CDP and custodian accounts in our broker comparison review. 

#2 – Less seamless onboarding compared to some digital brokers

Opening a CDP account is relatively straightforward, but it adds another step to the investing process.

You may also need to link your CDP account to a trading account before you can start buying or selling Singapore-listed shares.

By comparison, many digital brokers allow users to open a custodian account and start trading through a single app.

For investors who prioritise convenience and a simpler user experience, this can make custodian accounts more appealing.

#3 – CDP may not be available for all markets

A CDP account is mainly relevant for Singapore-listed securities.

If you are investing in overseas-listed stocks, ETFs or other foreign securities, these are usually held through a broker or custodian arrangement.

This means that even if you use CDP for Singapore stocks, you may still use a custodian structure for overseas markets.

For a full list of fees for CDP and custodian accounts, refer to our broker comparison review. 

Will I be eligible to vote in the AGM by holding on to my stocks under a custodian account?

If your shares are held in a custodian account, you won't have the direct ability to vote in a company's general meeting. 

However, it might still be possible for you to exercise your voting rights as a shareholder. Some brokers may allow you to indicate your voting preference as a beneficial shareholder.

Will I be eligible for corporate action (e.g. rights issue) by holding on to a custodian account?

Your broker will process and notify you as an entitled shareholder when there are any corporate actions, such as rights issues. 

You can then subscribe to these rights issues via the brokerage.

What happens if my broker goes bankrupt when I hold shares in a custodian account? 

This is one of the biggest concerns investors have when comparing CDP and custodian accounts. 

With a CDP-linked account, your Singapore-listed shares are held directly under your name in CDP. 

This means that even if the broker you used faces financial difficulty, your shares are still held in CDP and should not be affected by the broker’s own financial position.

With a custodian account, your shares are held through the broker or its custodian arrangement.

According to the Securities and Futures Act (SFA), brokerage firms must keep customer assets in a trust account separate from the firm’s assets. 

The custodian account is administered by a large and reputable financial institution to safeguard your investment. 

In the event that the brokerage faces financial difficulties, these assets will be excluded from claims from creditors, hence there will be a layer of protection for you as a customer. You will remain the rightful owner of the share and you can potentially transfer the shares to another broker.

However, recovering or transferring your holdings may still take time, even if the broker had taken steps to safeguard customer assets and segregate them from its own funds. 

The recent attention on offshore brokers such as Moomoo, Tiger Brokers and Longbridge is a reminder of why this distinction matters.

The issue involving these brokers was mainly related to China’s controls on mainland investors using offshore platforms, rather than Singapore investors using Singapore-regulated entities.

Still, it has led more investors to ask how their assets are held, whether the broker is regulated in Singapore, and what happens if the broker or its parent group faces pressure.

For me, the key takeaway is not that custodian accounts should be avoided.

Rather, investors should understand the custody structure, the regulatory status of the broker, and whether they are comfortable relying on the broker to administer their holdings.

After linking my CDP account to my brokerage account, can I still choose whether to trade using the CDP-linked account or broker's custodian account?

Yes. Linking your CDP account does not mean every Singapore trade must go through CDP.

Before placing an SGX trade, you should check whether the selected account is the CDP-linked account or your brokerage's custodian account (e.g. Moomoo), as the fees and custody arrangement may differ.

If you trade through the CDP-linked account, your SGX-listed shares will be held directly in your CDP account.

If you trade through the brokerage's custodian account, your shares will be held through brokerage's custodian arrangement instead.

For overseas shares such as US or Hong Kong stocks, holdings would generally still be through a custodian or nominee arrangement.

To learn more about trading on Moomoo's CDP account, you can read more in our guide on how Moomoo’s CDP-linked account works.

What should I take note of before linking my CDP account to my brokerage account?

First, you need to already have a CDP account.

If you are new to Singapore stocks, you can read our guide on how to open a CDP account.

Second, check the fees before trading, as CDP-linked trades may cost more than custodian trades. You can find out the full list of fees for CDP and custodian accounts in our broker comparison review. 

Third, remember that CDP-linked trading is mainly for SGX-listed securities. For overseas stocks, you would still generally use a custodian account.

Fourth, make sure you understand the difference between CDP and custodian structures, especially when it comes to ownership, fees, shareholder rights and access to Singapore investment products.

The main takeaway is that linking your CDP account gives you more flexibility. 

It does not replace the need to choose the right account before each trade.

Can I use Tiger Brokers with my CDP-linked Singapore shares?

Tiger Brokers also has a CDP-related feature through its Cash Boost Account.

This allows investors to link their CDP account and sell CDP-linked SGX-listed securities through Tiger Brokers.

This may be useful for investors who prefer to hold their Singapore shares in CDP, but want another way to sell their CDP-linked holdings when needed.

However, one important difference is that Tiger Brokers’ CDP linkage currently supports the selling of CDP-linked SGX-listed securities, rather than buying shares directly into CDP.

You can read more in our Tiger Brokers Cash Boost Account review.

How do I open a CDP account?

This may apply for your Individual CDP Securities Account using Myinfo, or through an online form. Click here to apply for your CDP Securities Account! 

Here’s a step-by-step guide on how to open a CDP account. 

You can apply for a CDP account if you are 18 years old and above. There are no fees charged by CDP for account opening or maintenance. 

To start buying or selling with CDP, you need to first link your CDP account with a trading account by filling up an account linkage form here. Once completed, your broker will handle the submission to CDP on your behalf.

What would Beansprout do?

There are advantages and disadvantages to both CDP and custodian accounts, which may make choosing one over the other difficult.

If keeping costs low is your priority, a custodian account can be attractive because many digital brokers offer lower commissions and a smoother onboarding experience.

This may be enough if you mainly want to buy a few Singapore blue chip stocks or ETFs through one platform.

If direct ownership, shareholder rights and access to Singapore market products matter more to you, then a CDP account may be more suitable.

A CDP account also gives you access to IPOs, Singapore Savings Bonds, T-bills and retail bonds, which may be important if you want to build a broader Singapore portfolio over time.

For me, the decision is less about whether CDP or custodian is “better”.

It is about whether the account structure supports what you want to do as an investor.

Some investors may prefer to use both: a CDP-linked account for direct ownership and Singapore market access, and a custodian account for lower-cost trading and convenience.

Before choosing a broker, I would compare fees, market access, custody structure, regulatory status, corporate action handling and how easy it is to transfer or withdraw assets.

To find the best CDP or custodian account, check out the guide to the best Singapore trading platform and brokerage account here.

If you are new to investing, you can also read our beginner’s guide to start investing in Singapore to understand the basics before choosing a brokerage account. 

Which account structure do you prefer for investing in Singapore stocks: CDP or custodian? Share your thoughts in the comments below or join the discussion in our Telegram group! 

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