After more than ten years with Lim & Tan (L&T) brokerage, I decide to do an OUTWARD TRANSFER of a portion of my stocks, to the custody of Standard Chartered bank (SCB).
Why so?
WEALTH LENDING SERVICES
One primary reason is SCB’s ability to provide Wealth Lending Service at low rates, typically less than 1.5% p.a. (subject to Libor/sibor). Instead, L&T can only provide Share Margin Lending that are typically 2.99% and higher.
Wealth lending is collateralized by the shares you owned and there is an LTV (Loan to Value) for each of the shares you own. LTV can be 0.3, 0.4, 0.5, 0.6 and up to 0.7 the values of the shares, depending on what shares you own!
For more details, you have to refer back to your individual broker / wealth manager as different portfolio at different time has different LTV and different lending rates.
CUSTODY
Custody is another more trivial reason for my transfer. While our SGX shares is generally in the custody of CDP (in a way guaranteed by MAS), your foreign shares are in the custody of the brokerage firm / bank. Henceforth, assuming that the broker firm / bank collapses, there is actually no guarantee of your shares. Of course, MAS in SG has strict rules and regulation, and as long as you are MAS regulatory trading firm, it should be pretty safe. Still, SCB being larger in financial muscle, perhaps give a better assurance than L&T?
GOOD SERVICES
Recently, I had my house financed by SCB. I am well pleased with SCB’s fast, simple and good service. Thereafter, I was contacted by SCB wealth / business managers. They are very friendly, knowledgeable and prompt in their response. SCB is not my first contact bank for home loan and wealth management. I contacted DBS, UOB and OCBC initially. In my opinion, SCB is more flexible in their dealing with me and offers more attractive rate. I also feel that the managers at SCB are also “hungrier” with better follow up.
HANDLING FEES & GIFT
The out-transfer handling fees charged by L&T is close to SGD2,000, that in my opinion is very hefty. See below.
Luckily SCB is kind enough to waiver my in-transfer fees and also rewarded me with a sign-up gift. The gift monetary amount more than offset the out-transfer fees I incurred.
TRADING FEES
L&T ‘s trading fee is not cheap, and it is not as if I don’t know. One reason I ignored the higher fees is due to the good service of my broker. He is more than a broker but a friend. Frankly, I don’t mind paying more for his service. End of the day, my broker is also earning a living from the commissions.
SCB and DBS treasure have more attractive fees. Still, the rates is unable to compare to the likes of TD Ameritrade, Tigerbroker, FSM, Interactive Broker etc. This is because there is a wealth manager assign to you.
Standard Chartered Bank
Source: https://www.sc.com/sg/wealth/investment/online-trading/fees-and-services/
Lim & Tan
Source: http://www.limtan.com.sg/page/site/public/faq-general.jsp
DBS Treasures
Source: https://www.dbs.com.sg/treasures/investments/online-trading/online-equity-trading
For more trading fees comparison, you can refer to this website: https://dollarsandsense.sg/singapore-stock-brokerage-house-comparison/ , but the figures need to be verified with the author.
I think u are mistaken, The custodian fee is not paid to Lim n Tan but the custodian bank like Citigroup or some US entity. So even if Lim n Tan go bust, Your share are still safe,
Oh… good to know. But my broker is unaware of that, and he did not tell me. Any links or webpage to confirm that for reading purposes?
I use Iocbc, the broker told me when i ask about this before. U may google search it.
Further check, I think if your shares is under the custody of the brokerage firm, then it is under their ownership, and if anything happened, they are responsible not the bank.
Hello, but you know SCB trading platform is like in dinosaur form now! Really provides the basics only and the platform is not the most stable. Used to be the cheapest trading platform if you are a priority customer but not anymore with the emergence of IB, Tiger, Moomoo~
Hi Nightmare Angel, thanks. And you are right, that trading platform is very basic. Likewise L&T is also only basic platform. In fact, I also sign up for TD Ameritrade. But the different is the wealth lending part and the people serving you.
Morn Brolf,
if it makes you feel better, if you are to tx out from your custodial say, DBS treasures, the outbound is $100+/counter.
on the other hand, tx inwards to the bank as custodial is usually free, so far, have not encountered any one that charges. coz they want your biz and generally generates other upsell leads
oh yes, i am guessing you are at least SCB priority now, dont forget to apply for their visa infinite card (for the free priority pass lounge visit. no use now, but when travel resumes =)
Hi BroFC, wow… can imagine the out transfer fees is ex compared to the in.
Thanks for the heads up for the visa infinite. I checked, and they did have this service.
It will come in handy if travel resumes.
Hi Rolf
Haha there shouldn't be any transfer in fees one from receiving party as far as I know. Because for shares kept in custody will have monthly fee liao, and they also want to garner assets under custody. Nevertheless you have icing on the cake in form of money or credits.
Hi STI, actually for SCB, they confirm that there is an admin/handling fees for in transfer as well, that is different from the custody fees. Yes indeed, the money credit is the main icing on the cake.
Hi Rolf,
Used SCB Priority for local equity in the past (think they were the first to offer this ready-cash, custodian service, with the lowest rate in the market then and no minimum), but now use DBS Treasure. Reason: have to call SCB (not the RM, but a separate department) for things such as preferential offering acceptance/excess application. For DBS, can do this easily on line on my own.
But maintain existing equity holding in SCB for the wealth lending purpose as what you mentioned (also have unit trust holdings with them for similar purpose). Use the borrowing to invest in dividend paying bond/balanced funds, but not equity (which is too volatile for me). For lower rates, I either invested directly in Euro ("zero" rate, just pay for the spread!) denominated funds or in S$ funds but changed to either Euro/Japanese Yen when the exchange rate is favorable, i.e., enjoy lower rates while waiting for opportunity to revert to S$ for forex gain. Have used DBS for similar leveraged investments and more, such as corporate bonds IPO or corporate bonds mispriced by market. DBS is better & more helpful for this purpose.
Have also taken equity loans from both SCB & DBS for corporate bonds investment, But this is because they happen to offer the best rates for equity/housing loans at particular times, not linked to the wealth lending aspect. For equity loans, opted for fixed rate to reduce risk posed by SIBOR fluctuation.
Hi retiree5559,
Thanks for your timely message. I pull back my SG shares transfer except for gold O87 and another stock, for the reasons of the rights/pref off/etc. Thank you for the advice.
The rates I was told as follow.
USD/SGD – 1M LIBOR/SIBOR + 1.1%pa (or 0.88%pa for Accredited Investor)
EUR/CHF/JPY – 1M LIBOR (floored at 0%) + 0.6% (or 0.38% for Accredited Investor)
Not sure what is “floored” for EUR/CHF/JPY. Their wealth lending is still affected by SIBOR/LIBOR and not fixed rate.
Thanks for the advice on the forex, it is useful and clever strategy.