Here's How You Can Lower Fees For Selling SGX-listed Stocks in CDP

This post was created in partnership with Tiger Brokers Singapore Pte Ltd (“Tiger Brokers”). All views and opinions expressed in this article are Beansprout’s objective and professional opinions.

What happened?

For many of us looking to invest, it often starts with choosing a brokerage that meets our needs.

There is often a discussion in the Beansprout community about which is the best trading platform and brokerage to invest in stocks and ETFs. 

I have come across questions relating to the following:

• Is there a way we can sell our CDP-linked SGX securities at lower cost, if our stocks are custodised with CDP?
• If there is a way we can trade stocks and tap on short term market opportunities without any pre-funding? 

In this article, I will introduce Tiger Broker’s Cash Boost Account and how it may be able to meet the needs of investors looking for the above. 

Let us dive deeper to find out!

What is Tiger Cash Boost Account?

Tiger Cash Boost is a new account type recently launched by Tiger Brokers to meet the needs of Singapore investors. 

With the Tiger Cash Boost Account, you can link your CDP account to Tiger Cash Boost to reduce the cost of selling your SGX-listed securities.

The Tiger Cash Boost Account also allows you to perform contra trading. This means that instead of having to fund the account to trade, you're given a buy limit to purchase stocks, allowing you to deploy your capital more efficiently. 

What are the key advantages of Tiger Cash Boost Account?

• Lower Fees: Link your CDP account to enjoy lower fees when selling SGX-listed securities.
• Instant Trading Limit: Buy SGD 20,000 or more upon buying limit approval! No pre-funding required.
• Maximise Opportunities: High capital utilisation allows you to capture market opportunities.
• Interest-Free Period: Enjoy an interest-free period until the 8th trading day*.
• Contra Trading: No need to fund the full settlement amount. Simply sell before the force-selling date and pay the difference.
• Broad Market Access: Trade stocks and ETFs in Singapore, United States, and Hong Kong.

Selling CDP-Linked SGX-listed Securities

With Tiger Cash Boost, you can link your CDP account and sell your CDP-linked SGX-listed securities at a low cost. 

Compared to a Custodian Account where stocks are held with the broker, some investors may feel more comfortable using a CDP-linked brokerage. 

However, one of the commonly-faced issues when investing in SGX-listed securities is the higher commission fees if we were to use a CDP-linked brokerage.

For example, most CDP-linked brokerages have a trading commission of 0.275% or more, with a minimum fee per trade of S$25.

For CDP accounts that require cash upfront, the trading commissions may be lower at 0.12%, or may incur a fixed fee of S$8.80. 

By using Tiger Cash Boost, you can sell your CDP-linked SGX-listed securities at a much lower fees with no cash upfront.

Tiger Broker’s Cash Boost Account has one of the lowest fees for contra trading securities with NO commission* and simply a platform fee of 0.12% (Minimum $5). 

*Tiger Brokers is running 0 commission for SGX market in celebration of Singapore’s 59th Birthday. Check it out here

• This means that if you a selling a stock worth S$1,000, you are only paying S$5 compared to other brokers of S$25, saving you a whopping S$20. 
• Similarly, for sell trades of higher value such as S$10,000, you are only paying S$12 (0.12%*10,000) compared to other brokers of S$27.50 (0.275%*10,000), saving you S$15.50. 

Example takes into account of current SG 0 commission promotion, please refer this link for more information.

However, do note that CDP linkage only supports selling. When you buy and settle SGX stocks, they will be held by Tiger Broker’s custodian on your behalf, not placed into CDP.

In addition to lowering fees for selling your SGX stocks in CDP, the Tiger Cash Boost account also offers you a buy limit to purchase stocks instead of having to fund the account to trade. 

How Does Contra Trading Work?

Contra trading allows you to buy stocks without any upfront cash and then Contra Sell or settle the purchase later. 

Once your Cash Boost account is opened, you will be automatically granted a buy limit of SGD 20,000. 

To start, just place a buy order. Here’s how it works:

• SG and HK Markets: You have until T+4 (Contra Period) to perform a corresponding sell trade (Contra Sell).
• US Market: You have until T+3 to perform a Contra Sell.

If you wish to hold the shares, simply make payment for the purchase before Contra Period ends.

If you opt to perform a contra sell, you’ll settle the difference between your buying and selling price.

Here’s an example on how contra trading works if you buy 100 shares at USD 10 each. Note that trading-related fees are not factored in the example. 

In Scenario 1, you would make a contra gain of USD 500 by selling the stocks at US$15 per share. This amount will be deposited into you Cash Boost Account.

In Scenario 2, you would make a contra loss of USD 200 by selling the stocks at US$8 per share. You will need to make payment into his Cash Boost Account as soon as possible to avoid interest.

Comparing Tiger Brokers Accounts

You might be wondering how is the Tiger Cash Boost Account different from the Cash Account and Margin Account. 

With the Tiger Cash Boost Account, you can buy SGD 20,000 (or more) once your account is approved with no pre-funding required. On the other hand, the Cash Account and Margin Account would require cash or collateral for you to trade.

Risks of the Tiger Cash Boost Account

Contra trading can allow us to tap on trading opportunities, but it's not without its risks. 

Here’s what I’ve learned from my experience:

• Potential for Significant Losses: Since you are contra trading with trading limit, you can incur losses that exceeds the capital you have. If the stock price moves against you, the losses can be substantial.
• Market Volatility: The stock market can be unpredictable. Sudden market movements can lead to unexpected losses, especially if you can't sell your position in time.
• Force-Selling: If you don't settle the trade within the contra period, your positions may be force-sold by the broker. This could happen at unfavourable prices.
• Interest Charges: If you fail to settle the difference between your buy and sell trades within the specified period, you may incur interest charges. These can add up quickly, eating into your potential profits.

To mitigate these risks, it might be worthwhile to make sure the following:

• Set clear stop-loss orders to limit potential losses.
• Stay informed about market conditions and potential news that could impact stock prices.
• Avoid over-exposure and keep my positions manageable.
• Maintain a buffer of funds to cover unexpected losses.

Opening a Cash Boost Account

If you're a Singapore Citizen or reside in Singapore and have a prime account, you can open a Cash Boost Account.

Here’s a step-by-step guide on how to do so:

1. If you are not a Tiger Brokers user, you can sign up for an account HERE
2. Register for a Tiger Prime Account 
3. Click on Home / Portfolio Page Account Switch button
4. Select Open Cash Boost Account

What would Beansprout do? 

If I have SGX-listed securities that are CDP-linked, I would find it worthwhile to open a Tiger’s Cash Boost account to lower my fees for selling these securities. 

Over time, the reduction in trading fees may help to improve my overall net return of my portfolio.

For investors looking to trade with a credit limit without any funding, the Tiger Cash Boost account also offers the ability to perform contra trading, with the flexibility and time to settle their trades longer.  

While this may allow us to tap on trading opportunities, we would need to be aware of the risk of losses, and make sure we have additional safeguards such as putting in stop-loss to mitigate these risks. 

Here’s a promo you need to know: Tiger Brokers is offering commission-free trading for SGX-listed stocks from now till 31 October 2024! In addition, stand a chance to win a staycation at Fullerton Hotel worth S$700!

Sign up for a Tiger Brokers account via Beansprout and receive welcome rewards below:

Important Information

This advertisement has not been reviewed by the Monetary Authority of Singapore. 

Any information provided in this article is meant purely for informational and investor education purposes, and should not be relied upon as financial or investment advice, or advice on corporate finance.

The information provided in this article are on an “as is” and “as available” basis without warranty of any kind, whether express or implied. Beansprout does not recommend any particular course of action in relation to any investment product or class of investment products. No information is presented with the intention to induce any person to buy, sell, or hold a particular investment product or class of investment products.

You may wish to seek advice from a financial adviser before making a commitment to purchase the product; and in the event that you choose not to seek advice from a financial adviser, you should consider whether the product in question is suitable for you.

The information provided herein may contain projections or other forward looking statements regarding future events or future performance of countries, assets, markets or companies. Actual events or results may differ materially. Past performance figures are not necessarily indicative of future or likely performance.

Please refer to the Tiger Brokers Singapore Pte Ltd website for more information on the full T&Cs and disclaimers.