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How To Start a CDP Account and Start Trading

It’s never too early to start investing. Perhaps you’ve managed to save a sum of money and want to get started in trading. This begs the next question – how does one even get started? Fret not. Our handy guide will cover all you need to know about making your first stock market investment.

What is a CDP account?

The Central Depository (CDP) account is operated by the Singapore Stock Exchange (SGX). It provides integrated clearing, settlement and depository services for people in the Singapore securities market. This includes both fixed income instruments and equities.

If you do not want to hold your own investments, you can opt for a custodian account.

Who is eligible?

In order to start a CDP account, you must fulfill the criteria below:

  • At least 18 years old
  • Is not an undischarged bankrupt
  • Hold a bank account with one of the banks, DBS/POSB, OCBC, Citibank, HSBC, Maybank, UOB, or Standard Chartered Bank. This facilitates Direct Crediting Service (DCS) to enable you to receive cash distributions and dividends directly into your bank account.

How to open a CDP account

Starting a CDP account is free – simply complete an online application form and have your account ready within 15 minutes.

Step 1: Prepare your supporting documents

Before filling in your application form, get your supporting documents ready. For convenience, you can use MyInfo on Singpass, but you will still need the following documents:

  • A local bank account
  • Tax Identification Number (TIN), also known as your NRIC number
  • A photographed or scanned copy of your signature

If you have a tax residency status outside Singapore, you are required to provide:

  • Country of tax residency
  • Completed Form-W9*
  • Tax Identification Number (TIN), also known as your NRIC number

*Form W-9 is only needed for US citizens, green card holders, and those who are treated as US tax residents as they live in the US, work there or are married to a US individual and taxed jointly.

Step 2: Fill in your application

Head over to the SGX website here, and apply for your CDP account online.

Source: SGX

Step 3: Await notification

When your CDP account has been verified and ready for use, you will be notified – most likely by post.

Alternative: Get a brokerage to open your CDP account

Start your CDP account via the brokerage firm you are opening an account with. If it’s your first time, your broker will most probably provide you with the application form for completion and submit them on your behalf. When your CDP account is ready, you will be notified by post within 10 business days of your application submission.

While your CDP account is free to use, you might have to pay your brokerage trading or administrative fees.

How to use your CPD account

Other than just storing your stocks, your CDP account allows you to do so much more. Here’s what else you can do with it:

1.   Check monthly transactions and dividend payouts

While you can check on your dividend payouts in your linked bank account, these transactions may get buried within your many bank transactions. The CDP account simplifies things by allowing you to check on your stocks’ dividends for the month. To check, simply hover to your portfolio’s ‘Payouts’ section. This will include information such as:

  • Dividend payable date
  • Your number of stock units that are entitled to the dividend
  • The sum you will receive
  • Payment rate for each unit held

2.   Get an overview of all your investments

With a CDP account, you can have several brokerage accounts with various brokerage firms. Under your CDP profile, you can view all your available broker accounts. This will include information such as your brokerage firm, trading account number, date of account opening and its status (whether it is still active or not). This allows you to keep tabs on your brokerage accounts at one glance.

Other than your brokerage accounts, you can also see your linked bank account details under the DCS. Your dividends will be paid to this bank account.

Additionally, you can also switch on your notifications to allow CDP to send you updates through email or SMS. These notifications can alert you to market updates, or your account statement.

3.   Access SGX tools

Source: SGX

To help investors, SGX has free tools available for use, such as:

  • Get market updates: Be kept up to date with analysis and other news on upcoming products, sectors, earnings, and others. You can also filter updates according to the stock name, sector, asset class, or time period.
  • Filter securities by product type: From REITs, Stocks, ETFs, SGS Bonds, Retail Bonds, Structured Warrants, to Business Trust, you can add products across various types into your own curated watchlist.
  • Screen stocks: SGX’s stock screener function lets you screen stocks according to criteria such as total revenue, market cap, yield, price-earnings ratio, sector, return on equity, and many others.
  • Screen ETFs: SGX’s ETF screener function allows you to screen ETFs according to the top performing ETFs, top ETFs by turnover, top gainer, or other criteria including turnover, YTD return, expense ratio, dividend yield, and many others.

Investing is a lifelong journey

Starting a CDP account is merely the first step of your investment journey. To get the results you desire, it requires discipline and a long-term commitment.

Prefer a more passive approach to investing? Consider some of the best robo advisors available here.

Need help planning out your finances? Simply reach out to us at ask@plannerbee.co!

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