Is 0 commission trading possible in SG? - Seedly
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FSM INVEST EXPO 2020

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Gabriel Tham

Asked on 14 Jan 2020

Is 0 commission trading possible in SG?

Do you think Singapore will ever be able to get 0 commission trading in future? It seems the trading commissions and fees have stopped going lower. Since everything is now done online, no remisiers are needed to key in orders, why aren't commissions getting lower?

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Hi Gabriel,

While I probably won't be able to give a total answer, one of the reasons is economics.

Everyone's pretty much charging 0.28% or $25 at this point. If any player makes a drastic cut in rates to gain market share, the rest will follow suit rapidly, and everyone will be back to status quo again, but all will be worse off. So it's a practically a Mexican Standoff.

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pat
pat
Level 7. Grand Master
Answered on 17 Jan 2020

No major players are willing to shake things up. They are all happy with the current arrangement

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Bjorn Ng
Bjorn Ng
Level 9. God of Wisdom
Answered on 15 Jan 2020

Definitely possible, but I don't see this happening at least in the near future.

We only have so few brokerages here and on our small little island, the population is not substantial as compared to the US. The standard in Singapore now is $25 min, or $10 for cash upfront, however as what Elijah said, you just need 1 of them to reduce, and the rest will follow suit. Well, Interactive Brokers is coming to SG soon, we'll see how that moves!

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Billy Ko
Billy Ko
Level 7. Grand Master
Answered on 14 Jan 2020

I certainly do hope so! I know of a couple of US brokerage firms (i.e. Robin Hood) that are providing zero commission services and truth be told, given how Singapore aims to make investments more accessible and affordable for the general public, I wouldn't be surprised if one day we see a zero commission broker (and I certainly do hope we do). The current pricing structure of brokers are rather traditional and dated. I've also heard of others who charge a fixed monthly commission as operational fee but day-to-day trades are zero charge.

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Choon Yuan Chan
Choon Yuan Chan
Level 9. God of Wisdom
Answered on 14 Jan 2020

Yes,it is possible.however such brokerages will be pre funded account. Brokerages have to have have revenue to maintain the infra, therefore i feel if a brokerage goes to 0 comission, they will have to earn revenue in other forms such as asking for monthly account fee or asking you to park $10,000 to qualify for zero com. They will then use the $10,000 to park in money market funds to earn interest.

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Wilson Nid A Break
Wilson Nid A Break
Level 9. God of Wisdom
Answered on 14 Jan 2020

Unless there's a new disruptor that comes in to change the existing rule, i see no reason why the current incumbent would be willing to reduce fees to nil for a singapore market that is so small in domestic size

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