How to Start Trading Stocks in Singapore

Stock trading in Singapore offers a dynamic environment for individuals interested in participating in financial markets. The Singapore Exchange (SGX) provides a regulated platform for a variety of securities, making it accessible for both seasoned investors and those new to trading. Engaging with the market can potentially grow wealth. This guide provides foundational information for stock trading in Singapore.

Preparing to Trade

Before engaging in stock trading, individuals must complete several preparatory steps to ensure they are eligible and equipped for market participation. This involves meeting specific criteria, gathering necessary documentation, and establishing the required accounts. These initial actions lay the groundwork for effective and compliant trading activities.

To trade stocks in Singapore, an individual must be at least 18 years old and not an undischarged bankrupt. Residency considerations are relevant, as specific documents are required for Singapore citizens, Permanent Residents (PRs), and foreigners. Foreigners can open investment accounts, though some restrictions may apply for certain products.

Opening a trading account necessitates providing essential documents. For Singapore citizens and PRs, this includes a NRIC (National Registration Identity Card) or passport, proof of address (such as a bank statement or utility bill issued within the last three months), and bank account details for direct crediting services. Foreigners generally need their passport, a valid work pass, and proof of residential address. A photographed or scanned signature and a Tax Identification Number (TIN) are also required.

A Central Depository (CDP) account is essential for stock trading in Singapore for locally listed shares. Operated by the Singapore Exchange (SGX), a CDP account serves as a secure repository for securities, allowing investors to directly own shares, bonds, and other instruments listed on the SGX. This direct ownership provides shareholders with entitlements like invitations to Annual General Meetings (AGMs) and direct notifications of corporate actions. Opening a CDP account can be done online through the SGX website, with options for expedited processing via MyInfo for Singapore citizens and PRs, or a manual form submission for others.

Alongside a CDP account, a brokerage account is necessary to facilitate actual trades. This account acts as the interface through which buy and sell orders are placed on the exchange. When choosing a brokerage, factors to consider include the platform’s features, such as its user interface, mobile app availability, and real-time market data access. The availability of research tools, educational resources, and responsive customer support are also practical considerations. Many brokers offer access to both local and international markets, and some provide demo accounts for practice.

Funding the brokerage account is the final step before trading can commence. Common methods for depositing funds include bank transfers and local payment services like PayNow. Processing times for deposits vary, but funds become available within a few business days. Some brokers may offer multi-currency accounts, which can be useful for trading in different markets.

Understanding the Market

Understanding the Singapore stock market is beneficial for anyone looking to trade. Knowing the operational structure, trading hours, and common types of securities available helps in navigating the market effectively. Familiarity with basic market terminology is also helpful for interpreting market data and making informed decisions.

The Singapore Exchange (SGX) is the primary stock exchange in Singapore, serving as the marketplace for various securities. It provides integrated clearing, settlement, and depository functions for securities traded on its platform. The SGX operates with specific trading hours from Monday to Friday.

Regular trading sessions on SGX run from 9:00 AM to 12:00 PM (noon) for the morning session, and from 1:00 PM to 5:00 PM for the afternoon session. There are also pre-open phases from 8:30 AM, and non-cancel phases before market open and after mid-day break, during which orders can be submitted but not matched. An extended hours session may occur after main trading hours.

The SGX lists various types of securities for trading:
Ordinary shares, representing ownership in a company.
Real Estate Investment Trusts (REITs), which allow investors to own a portfolio of income-generating properties.
Exchange Traded Funds (ETFs), providing exposure to a basket of assets like stocks or bonds, and traded like individual stocks.
Special Purpose Acquisition Companies (SPACs), offering an alternative investment vehicle.

Basic market concepts help understand price movements and order books:
Bid price: The highest price a buyer is willing to pay.
Ask price: The lowest price a seller is willing to accept.
Spread: The difference between the bid and ask price.
Volume: The total number of shares traded over a period, indicating activity.
Market depth: A detailed view of buy and sell orders at various price levels, showing supply and demand.

Several order types can be used when trading:
A market order is an instruction to buy or sell a security immediately at the best available current price, prioritizing execution speed over price certainty.
A limit order specifies a maximum price to buy or a minimum price to sell, ensuring execution only at the desired price or better, though it does not guarantee execution.
A stop-loss order limits potential losses by converting into a market order once a specified “stop price” is reached, automatically initiating a sale if the price falls to a predetermined level.

Executing a Trade

Once accounts are established and the market understood, the next step is trade execution. This process centers on interacting with the chosen brokerage platform to place and manage orders. The platform streamlines the buying and selling of securities, providing tools for monitoring investments.

Accessing a trading platform begins by logging into the brokerage’s online portal or mobile application using credentials. These platforms are designed to provide a comprehensive view of market data and portfolio information. The interface allows users to navigate various sections, including market watchlists, account summaries, and trading functionalities.

To place an order, an individual first locates the desired stock using a search function or by browsing market listings. Selecting the stock will display its current price, trading volume, and other relevant market data. Within the stock’s detail page, a dedicated trading interface allows for order entry.

Placing a trade involves several specific inputs:
Specify whether to buy or sell the security.
Enter the quantity of shares.
Choose the appropriate order type (market for immediate execution, or limit to control price).
If a limit or stop-loss order is selected, set the specific price.

Before submitting, the platform presents a summary of order details for review. This confirmation step allows for a final check of the stock, quantity, order type, and price before the order is sent to the exchange. After confirmation, the order is placed, and its status can be tracked within the platform’s order book or transaction history.

Order execution refers to the completion of a trade. Once an order is placed, it may show as “pending” until it is matched with a corresponding buy or sell order. A “filled” status indicates that the trade has been successfully executed. The platform will provide notifications or updates regarding the execution status, along with the actual price at which the trade occurred.

Monitoring a portfolio is an ongoing activity after trades are executed. Brokerage platforms provide tools to view current holdings, track their performance, and assess unrealized gains or losses. Many platforms offer customizable dashboards and real-time data to help investors stay informed about their investments. This allows individuals to track their overall investment progress and make timely decisions based on market movements.

Costs and Taxation

Understanding the financial implications of stock trading, including costs and tax treatments, is important for investors. Various fees are incurred during trading activities, and the tax landscape in Singapore offers specific considerations for individuals. Awareness of these aspects helps calculate potential returns and manage financial obligations.

Stock trading in Singapore involves several types of fees. Brokerage commissions are charged by the brokerage firm for facilitating trades, calculated as a percentage of trade value or a flat fee, often with a minimum charge. For transactions below S$50,000, minimum commission fees can range from S$25 to S$28 with some brokers.

In addition to brokerage fees, the SGX imposes clearing and access fees on transactions. Other charges can include regulatory fees. Stamp duty is not applicable to the purchase of shares listed on the Singapore Stock Exchange, but 0.2% applies to the transfer of shares in private companies or unlisted shares, based on the purchase price or net asset value, whichever is higher.

Individual investors in Singapore generally do not pay capital gains tax. Profits from share sales are not taxed for individuals. However, if an individual is deemed to be trading stocks with a profit-making purpose, indicating a business rather than an investment, these gains could be considered taxable income. The Inland Revenue Authority of Singapore (IRAS) determines this based on the specific facts and circumstances of each case.

Dividends from Singapore-listed companies are tax-exempt for Singapore residents under the one-tier tax system. This means that the tax paid by the company on its profits is considered final, and shareholders do not face further tax on the dividends. For non-residents, interest income from specified financial instruments may be exempt or subject to a 15% tax rate, depending on their tax residency and whether they have a permanent establishment in Singapore.