In this article, we explore how to open a CDP Account in Singapore for new investors.
Custody of Holdings
In order to trade securities in Singapore, most financial institutions will require you to open a Direct Securities Account with The Central Depository (CDP) or simply referred to as a CDP account.
The CDP is basically a place where all (in most instances) the securities (financial assets) you have bought in the local stock market are held.
For most stock brokers, local securities that you buy are placed in your CDP. But a number of brokers hold customer’s securities in a custodian account under their name. This custodian account is also called a CDP sub-account.
While the securities are held in your name, they are not placed in your CDP account. This means, if you were to login to the SGX.com to check the holdings of your CDP account, the securities held in the broker’s custodian account will not be reflected in your balance.
All foreign securities are held in your broker’s custodian accounts as well as certain securities bought under certain schemes such as a monthly investment plan.
There is no big issue if your securities are held in a custodian account as the financial assets will be under your name. It is not something you can control or change and you do not really have to worry about losing them.
However, there is one important point to take note of. Securities held in your own CDP account can be sold through any stock broker account linked to it. However, securities held in a custodian account can only be sold through that stock broker.
For example, if you bought 10 lots of shares of the STI ETF and these shares are held in a custodian account of PhilipCapital, you cannot sell these shares with a DBS Vickers trading account.
However, if the shares were held in your CDP account, you could sell the shares with a DBS Vickers trading account, even if you bought them through PhilipCapital.
There is an option to transfer securities out of a broker’s custodian account and into your own CDP account for a fee. If you wish to transfer securities to your CDP account, you will have to pay a fee (about $10) to CDP and another fee (about $10) to the stock broker for each counter that you wish to transfer.
Note: You can have many trading account with different brokers but all will link to your single CDP account.
Opening the CDP Account
To open a CDP account, you must be at least 18 years old and not be an un-discharged bankrupt. You must provide a copy of your identify card (NRIC/ 11B) and original copies or E-statements of ONE of the following, dated within the last 3 months:
Bank statement from any MAS licensed banks or,
Central Provident Fund (CPF) statement or,
IRAS tax return.
You can open an account by going to CDP at 11 North Buona Vista Drive #06-07, The Metropolis Tower 2. Singapore 138589
But, as mentioned in the previous article, the simpler way is to have your chosen stock broker assist you in applying for the CDP account when you open a trading account.
Note that CDP account activation is independent from your stock broker. You will get separate confirmation from CDP and it can take up to 2 weeks.
Your broker will then link your trading account to your CDP account. Linking your CDP account to your trading account is very important. You will not be able to trade if they are not linked.
You can open a joint CDP account with someone.