Asked on 03 Dec 2019
Will we see apps such as Robinhood or WeBull, both of which only available in the U.S, in the Singapore markets in the future? wouldn't this disrupt our local stock brokers in Singapore? what would be the possible repercussions?
Well, considering just the size of Singapore, I doubt that it would be feasible considering all the costs involved to maintain the brokerage itself, at least for our current brokerages.
However, with IB Lite recently released and their intention to expand into Singapore, I do see there is a chance it may be offered, so fingers crossed..!
Maybe. It’s a trend now for brokerages to reduce commissions, but they have to absorb losses. So they must find a way to sustain the business with AUM.
With Fintech coming soon, brokerages will have to innovate by earning from other revenue sources.
Brokerage feels like a commoditised offering these days!
US have already gone zero comms. In my opinion, sg will follow suit in the long run. Interactive Brokers is already coming to sg to set up shop. The brokerage fees kept decreasing over the years. IFast/robo advisers are also disrupting the industry with their low fees. Remisier/stockbroker have to eventually reinvent themselves as fund managers to survive.
There are startups trying to break into the scene but none so far successful in Singapore. Check out Freetrade from the UK; they're a zero-fee trading platform that started out about 4 years ago. I've had the luxury of using it when I lived in the UK and can vouch it's indeed commission-free and has a lovely UI. As an active investor, I too wish Singapore will have one soon. Will require more relaxes in regulatory restrictions, supportive funding and more exposure to retail investors.
I don't think so! It's pretty expensive to setup these kind of brokerages here, since we are a small country and we have more than enough brokerages available. Upkeep cost is definitely not cheap here as well.. But let's see what IB can do when it opens in Singapore!
To run a brokerage, there are some minimum costs involved such as offices, and a back-end infrastructure and servers. Given Singapore's scale, it might be hard and not impossible.
It depends on the authorities too, because each broker requires a license to operate. If I recalled, FSMOne applied for the license previously but it took them a long time. Now then FSM is operating, some traditional brokers are facing some pressures because of their higher cost structures.
I think it is time that we have commissions free structure.
For Robinhood and Webull, they make commissions via selling your trades to high frequency traders. It won't be any concern to you if you are investing for the long run.
For InteractiveBrokers, they are earning from the interests from your excess cash balances or when you borrow money from them.
I highly doubt it in the near term, as the Singapore market is frankly too small. The company that tries to do this will have to find a way to make up for it with revenue streams else where, which could turn out to be a loss making venture. You can't operate a business without costs, even if everything could be done online, you will still inccur operating costs.
However, competition should continue to drive costs lower. How low? I have a feeling we are yet to see the bottom.
A stock broker's job is to find a good stock that can be worth investing in, that alone should actually justify a fee for the broker's on going advice. I would pay for good advice, as instead of thinking about what I could make from the advice, I would tend to think of the pitfalls my advisor/broker has helped me side step. Such an advisor is worth his fee.
They have to make their money somehow - you can see in Webull disclosures there is a lot of alternate revenue sources (payment for order flow, revenue from stock lending, etc). If those items don't work in Singapore then it is hard for a company offering commission-free to get off the ground.
There might be if a disruptor can come in. That said in the future possible. But in the near term unlikely. Intereactive Brokers recently obtained licenses and they are planning to charge comission on teh Singapore market when in the large overseas market, IB operates in, they are giving comission free trades.
To me, this is a sign that its very unlikely we will have comission free services. Instead entrants are likely to follow the incumbemts' lead and still charge us comission in order to earn a fat lucrative profits
Who knows ...
but probably: yes
Singapore is a leading financial hub,
When Robinhood etc. started the zero-commission thing, now the large U.S. brokers also start zero USD trading, probably Robinhood cannot have an enduring business, who knows. Depends on the non-trading-fee dependent businesses of all involved companies.
The closest you can get for commission-free stock trading is to invest in ETFs and REITs via a Kristal.AI investment account for up to USD50,000 .
Details on pricing here.
I can only dream of, given singapore small stock market capitalization & relatively low equity investment culture, i doubt it will be profitable to earn monies from asset management and/or margin financing for local stocks trading by potential apps.
I just hope Robinhood can be acessible to foreigners
Challenging. Given the economy of scale in Singapore, there are a lot of limitations in what we are capable of and what we need to take note of.
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