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Commission-free trading in Singapore finally!

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Old 29-07-2020, 09:27 AM   #1
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Commission-free trading in Singapore finally!

Just received an email from TD Ameritrade, they'll be dropping commissions from 3 August. I have accounts in both IBKR and TDA, hopefully IBKR follows suit!
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Old 29-07-2020, 10:47 AM   #2
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Just received an email from TD Ameritrade, they'll be dropping commissions from 3 August. I have accounts in both IBKR and TDA, hopefully IBKR follows suit!
There's nothing particularly exciting in this. Other U.S. brokers available to residents of Singapore, notably Firstrade Securities, have offered commission free trading on U.S. securities for quite some time.

There are at least two outstanding problems with these offers. First, these zero U.S. commission U.S. brokers don't offer low cost ways to start and finish with Singapore dollars in Singapore. Second, most residents of Singapore shouldn't be mucking with U.S. listed securities due to the tax considerations.

I should also mention that the brokers still make money even when the commissions they charge you are zero. For example, they keep any/all exchange rebates when you provide liquidity. Moreover, they are not necessarily obliged to route orders in the way(s) you would like them routed for the best price.
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Old 29-07-2020, 11:12 AM   #3
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There's nothing particularly exciting in this. Other U.S. brokers available to residents of Singapore, notably Firstrade Securities, have offered commission free trading on U.S. securities for quite some time.

There are at least two outstanding problems with these offers. First, these zero U.S. commission U.S. brokers don't offer low cost ways to start and finish with Singapore dollars in Singapore. Second, most residents of Singapore shouldn't be mucking with U.S. listed securities due to the tax considerations.

I should also mention that the brokers still make money even when the commissions they charge you are zero. For example, they keep any/all exchange rebates when you provide liquidity. Moreover, they are not necessarily obliged to route orders in the way(s) you would like them routed for the best price.
Is tax considerations such big of a deal that residents of Singapore should totally avoid us listed securities? Sounds a bit extreme though.
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Old 29-07-2020, 11:14 AM   #4
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There's nothing particularly exciting in this. Other U.S. brokers available to residents of Singapore, notably Firstrade Securities, have offered commission free trading on U.S. securities for quite some time.

There are at least two outstanding problems with these offers. First, these zero U.S. commission U.S. brokers don't offer low cost ways to start and finish with Singapore dollars in Singapore. Second, most residents of Singapore shouldn't be mucking with U.S. listed securities due to the tax considerations.

I should also mention that the brokers still make money even when the commissions they charge you are zero. For example, they keep any/all exchange rebates when you provide liquidity. Moreover, they are not necessarily obliged to route orders in the way(s) you would like them routed for the best price.
What tax considerations are u referring to? As sg residents, there should be no tax unless ur talking about dividends but I don't think there's capital gain tax?

When the commissions is already zero, they can keep all rebates to themselves.
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Old 29-07-2020, 11:25 AM   #5
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There's nothing particularly exciting in this. Other U.S. brokers available to residents of Singapore, notably Firstrade Securities, have offered commission free trading on U.S. securities for quite some time.

There are at least two outstanding problems with these offers. First, these zero U.S. commission U.S. brokers don't offer low cost ways to start and finish with Singapore dollars in Singapore. Second, most residents of Singapore shouldn't be mucking with U.S. listed securities due to the tax considerations.

I should also mention that the brokers still make money even when the commissions they charge you are zero. For example, they keep any/all exchange rebates when you provide liquidity. Moreover, they are not necessarily obliged to route orders in the way(s) you would like them routed for the best price.
Hmm thanks for the info! I guess I'll stick to IBKR then. Regarding the order routing, does IBKR route orders better than TDA?

Is tax considerations such big of a deal that residents of Singapore should totally avoid us listed securities? Sounds a bit extreme though.
Agree with you on this. I try to maximise tax efficiency by having a bias towards stocks that don't pay dividends e.g. BRK.B, AMZN

What tax considerations are u referring to? As sg residents, there should be no tax unless ur talking about dividends but I don't think there's capital gain tax?

When the commissions is already zero, they can keep all rebates to themselves.
No capital gains tax, but yes dividend-withholding as well as estate taxes.
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Old 29-07-2020, 11:29 AM   #6
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can fund with sgd if you have dbs account, they will probably use the bank spread of 0.7%.
maybe corporate account have better rate
https://www.tdameritrade.com.sg/why-...d-funding.html

Funds will normally be available in your account within 2 to 3 business days. Please note that this is for DBS/POSB bank account holders only.

https://www.tdameritrade.com.sg/why-...e/pricing.html
https://www.tdameritrade.com.sg/faqs.html
DBS/POSB Electronic Transfer:

Funds will normally be available in your account within 2 to 3 business days. Please note that this is for DBS/POSB bank account holders only.
withdrawal probably in usd
not sure if they charge for withdrawal to dbs but wire is $25 and dbs have incoming wire fee? not sure if its within the bank
https://www.tdameritrade.com.sg/faqs.html

Received this from TDA yesterday:

The investing and trading experience you know and love is getting even better. Starting 3 August, you'll also enjoy:

$0 commission on online stock trades
$0 commission on online ETF trades
$0 commission on online options trades
(Contract fees now only USD$0.70, plus no assignment or exercise fees.)

Applies to U.S. exchange-listed stocks, ETFs, and options.

The change to zero commissions comes with zero change to the level of service you've come to expect. You still get unlimited free access to our best-in-class trading platforms. Plus, you get knowledgeable local support and helpful educational resources. Who says you can't get something for nothing?
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Old 29-07-2020, 11:48 AM   #7
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Is tax considerations such big of a deal that residents of Singapore should totally avoid us listed securities? Sounds a bit extreme though.
What tax considerations are u referring to? As sg residents, there should be no tax unless ur talking about dividends but I don't think there's capital gain tax?
U.S. dividend and U.S. estate taxes apply to most U.S. listed securities. Residents of Singapore (who are not U.S. persons) are non-favored and pay the 30% non-treaty dividend tax rate.

Regarding the order routing, does IBKR route orders better than TDA?
Yes.
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Old 29-07-2020, 11:52 AM   #8
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U.S. dividend and U.S. estate taxes apply to most U.S. listed securities. Residents of Singapore (who are not U.S. persons) are non-favored and pay the 30% non-treaty dividend tax rate.
Yep but if dividend isn’t really that much of a concern because the counter either doesn’t pay dividend or pay very little dividend and is really about capital gains and also up to 60k is exempted from estate tax, not really an outright no, no?
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Old 29-07-2020, 12:20 PM   #9
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U.S. dividend and U.S. estate taxes apply to most U.S. listed securities. Residents of Singapore (who are not U.S. persons) are non-favored and pay the 30% non-treaty dividend tax rate.


Yes.
I see, thanks, I buy stocks for the capital gain, dividend play is not my cup of tea

Yep but if dividend isn’t really that much of a concern because the counter either doesn’t pay dividend or pay very little dividend and is really about capital gains and also up to 60k is exempted from estate tax, not really an outright no, no?
Yup same as me. This rule has been in place for a long time. It's not broker specific at all
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Old 29-07-2020, 12:39 PM   #10
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Nothing is free in this world, have to find out what is the alternative they are using to cover this commission cost.
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Old 29-07-2020, 02:48 PM   #11
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yah. same. moi concern is not too long ago TD say $0 not for non-US resident. now why they policy shift and more importantly how they make money?
via increase bid/ask spread? via dividend handling?
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Old 29-07-2020, 02:57 PM   #12
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Nothing is free in this world, have to find out what is the alternative they are using to cover this commission cost.
yah. same. moi concern is not too long ago TD say $0 not for non-US resident. now why they policy shift and more importantly how they make money?
via increase bid/ask spread? via dividend handling?
It's been asked and answered many times in the US where the free trading trend started from. The earning mechanics are the same since TD is only allowing you to trade US for free so it makes sense why they can open it to non US residents too.
Realise how it isn't open to small markets like SGX?

https://www.nytimes.com/2019/11/29/y...k-trading.html

Last edited by crystalnox; 29-07-2020 at 03:00 PM..
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Old 29-07-2020, 03:52 PM   #13
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Second, most residents of Singapore shouldn't be mucking with U.S. listed securities due to the tax considerations.
I'm not sure I'm understanding this correctly. You're saying that 'most residents of Singapore' should not invest in 'US listed securities' - ie, any shares/bonds listed in the US? So, according to you, just stick to buying SGX-listed 'securities' on local exchange? Or is there something I'm not understanding right, despite re-reading what you wrote several times?
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Old 29-07-2020, 04:15 PM   #14
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I'm not sure I'm understanding this correctly. You're saying that 'most residents of Singapore' should not invest in 'US listed securities' - ie, any shares/bonds listed in the US?
Correct. There are a couple fairly rare, exotic exceptions. I could see how direct holding of U.S. Treasuries might be occasionally useful, for example.

So, according to you, just stick to buying SGX-listed 'securities' on local exchange?
That would be the implication of what I wrote if there were only two countries in the world with securities listings.

Or is there something I'm not understanding right, despite re-reading what you wrote several times?
There are many securities listed in the United Kingdom (London), for example.
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Old 29-07-2020, 04:16 PM   #15
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this is interesting

not sure why people believe there is free lunch in this world

any idea how they are making up for the $0 fees?

Embedded in the prices of stocks or annual AUM fees? Surely will earn from u, need to figure out from where or from when.

I considered foreign broker but I hear from here that taxation on assets with US based companies are different from those held with local firms and didn't proceed, at least for estate matters.
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