My Portfolio

Friday, June 23, 2017

iFAST launches stock-brokerage services: Is it the best?

iFast has finally launched the highly-anticipated stock brokerage services today. It has

What are the fees?

The rate of 0.12% is attractive, and best in town.

With a minimum of SGD 10, iFast offers similar rates compared to the pre-funded accounts available in the market. Examples are DBS Vickers Cash Upfront, Maybank KE Trade Prefunded Account and the famed Standard Chartered Online Equities Trading Account.

Lower Minimum fees are available in the market with a few caveats:
  • Promotions such as DBS Vickers SGD5 Trade Rebate
  • Stand Chart Priority Banking Status: No Minimum fee

iFast works on a custodian basis
Most of these "Pre-funded" accounts manage your stocks via a custodian basis. This means that the stocks purchased will not go into your CDP account, and hence not be under your name. 
To me, it doesn't matter much. Some reasons to dislike custodian will be default risk of the broker, unable to attend AGM.

  • Can sell existing SG stocks (even IPO) in CDP at the iFast rate
This is a great complement to DBS Vickers Cash Upfront. If we are particular about owning shares in our name (in CDP), there is a way to do this while enjoying cheap rates.
  • We can use DBS Cash Upfront to BUY Singapore shares [Cash Upfront: 0.18% min SGD18
    Promotion rate: 0.12%, min SGD10]
  • Use iFast to SELL Singapore shares [0.12% min SGD10]
  • If the stock is bought and not cleared/ credited into the CDP (T+3), DBS Cash Upfront can be used to sell the holdings.
Conclusion: What to use iFast for?
For BUY orders: iFast rates are sweet (best in town), but stocks are credited into custodian accounts. This is similar to Stand Chart, so the issue to consider will be whether you trust the credit worthiness of iFast. If you do, iFast is the cheapest.
If you want to own stocks in CDP, then look no further than DBS Cash Upfront.

For SELL orders: iFast rates are also unparalleled. Here, iFast triumphs the other prefunded accounts as it is not only able to sell singapore equities in its own account, but also those in CDP.

Breakeven comparisons 
If you happen to be a SC priority, commission fees have no minimum. For iFast to be worthwhile, a trade size of at least $5556 is required to generate at least $10 of fees.