Thursday, January 8, 2015

STANDARD CHARTERED CLOSING ITS EQUITY BUSINESS

Update: As informed by Anon and TI, SCB's retail operations in Singapore will not be affected, so this post is null. Woops!

Hot news, just off the press out an hour ago.

Exclusive: Standard Chartered to close equities business globally - memo (Reuters)


This is of course a very sad day for many many local investors who have jumped ship to SCB because of their no minimum fee brokerage services.

What happens now to existing customers is now still in the dark.

I imagine that SCB will transfer existing holdings to CDP accounts, either at a fee or waived for the inconvenience.

I strongly doubt the current brokerages will be adjusting their prices down significantly since SCB is no longer a threat to their market share. I can see minimum brokerage charges dropping from the current $18-35 to maybe $5-15 to adjust to the lower board lots. However, significant outlay is still at hand.

Who cares that the minimum board lot drops from 1000 to 100 if the minimum amount to invest in any single stock is still more than $5000? The SGX ruling only helps give liquidity to a handful of expensive stocks. Without a low cost broker, dropping to board lots of 100 is absolutely useless.

With the fall of SCB as the only real low cost brokerage, I am currently suspending all my own SGX trading activities. It is not possible for me to execute my strategy without a low cost broker. I will no longer be buying at stocks or ETFs from SGX.

Instead, I will be shifting my attention to other more productive areas, such as global macro analysis with unit trusts as a vehicle.

How unfortunate.

8 comments:

  1. Just called SCB. There is no impact to the Online Equities Trading. The news does not impact their Retails side of the business.

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    Replies
    1. Hey anon, thanks for sharing your info :)

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  2. Anonymous is right, I called SCB as well and updated my earlier blog post.

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    1. Thanks TI, I was so sad the rest of the day at work thinking about it, haha! It's good news then, looking forward to smaller board lots!

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  3. Hi GMGH,

    For SCB are there any other fees besides the 0.20% comm? I'm looking at this page http://sgx.i3investor.com/jsp/hti/brokers.jsp and it under additional notes for SCB it says 'Monthly subscription: SGD 8. Minimum account size: SGD$10,000'
    Since you use SCB can you help to clarify?
    Thanks a lot

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    Replies
    1. Hi Anon,

      Nope, there is no $8 monthly fee being levied on me. As far as I know, I only pay % comm when I make buy and sell trades. It's very fuss-free and no-frills, I like it very much.

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  4. Thanks for your reply, GMGH. Another question I would like to ask is if I wish to open a brokerage account with SCB just to trade shares, do I need to take the CAR? Shares aren't classified as SIP, so I'm pretty confused. Thanks.

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    Replies
    1. Hey Anon,

      No prob! Honestly it has been quite a while, so I can't really remember. If I recall, I think they do ask you if you have experience before. I vaguely remembered my friend stumbling with his application because this was his first go at investing.

      All I remember was that I went down to a branch and signed up for an internet bank account and the trading account on the same day, and about a week or 2 later everything was settled and done and I could start buying equities already!

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