Disguised Charges by SG Brokerages

Recently brokerages in Singapore has become more competitive after the entry of Tiger Brokers charging 0.08%++ and US low costs brokerages like TD Ameritrade at 0% commission for US and Interactive Brokers at 0% commission for US, 0.08% for SGX. This has driven down brokerage commission charges by several local brokerages such as POEMS to 0.08% SGX and USD 6.88 flat and LimTan to 0.12%-0.18% for SGX and USD 0.07% (not really that competitive actually but it gives NTUC Linkpoints).

However, what drove me to write this post is the disguised charges by SG brokerages that used to be dormant & has started taken effect. These are charges that applied to custodian shares accounts (most of the lower commission charges require you to use custodian accounts where your shares are held in trust with your brokerages, this assure the brokerages that you will have to sell your shares through that particular custodian brokerage where your shares were held).

Most of these disguised charges were previously "waived until further notice" but has started to taken effect in recent months since August 2020.

Examples:

POEMS charge $10.70 for "Cash Offer, Rights Issue, Privatisation Exercise, Merger & Exchange, Cash In Lieu, Liquidation, Redemption of Warrant, Loan Stock or Bonds, Capital Distribution, Tender Sales, Warrant Conversion" which is quite a heavy cost that comes with basically any action that you take as a shareholder, whether its receiving dividend or choosing between scrip or cash dividends. The brokerage now has squeezed itself in between to take a unfair cut out of it, this is regardless if you receive a $10 or $5000 dividend. By the way if its $5,000, POEMS "1% on net dividend subject to min of S$1.07 and capped at S$53.50 (inclusive of GST) + Foreign broker fees and taxes (if applicable)" would ensure it takes 1% at $50, capped at S$53.50.

This compares to other brokerages, like LimTan's Schedule of Charges.pdf 

One can see how ridiculous the brokerage market has become with its charges, the way they take a cut out of our hard earned investments without being a shareholder, I wonder about the "fiduciary duty" that these firms supposed to have. Worse (probably as usual), this happens in stealth, meaning there was never a formal letter or email with any exit options given, these brokerages just happily charged your account's cash away and give you the balance. Had there been a formal announcement & exit option, such as if you wish to avoid these charges, we can transfer them back to your CDP for free? (no? in your dream world maybe).

In any cases, one need to take stocks of your portfolio, if its short term trading, perhaps the lowered commission fees might be worthwhile to use custodian accounts and try to sell / exit before any corporate action's ex-date. But if you are like me or most retail investors who held shares since start of 2020, you probably have some shares "struck" in your portfolio where their market price is lower than your cost price. Most people might think well the company is good, it gives dividend, so lets hold it... 

Yup... until the brokerages come in & take a cut, without telling you (oh its there at our website you see, oh my mother also said one should be act with integrity & communicate transparently too... didn't your mom taught you that?).

If you find yourself not wanting to be "slaughtered" like some fat hog (I'm skinny with little money btw); there's one option left, that is to submit a formal request to your brokerage to transfer your shares in custodian back to your CDP account where its safe & sound (no charges whatsoever of the disguised fees above). You will need to ensure you negotiate hard, SGX CDP charges only one time $5.35 when you in custodian & you in CDP are essentially same or related. https://www.sgx.com/securities/depository

Be careful, not to be led astray & suffer more cuts with other fees; until they cut you, then you realize it.