Why I decided not to use 8 Securities

This post is a continuation of my post dated 23 July 2017 (see below).

• 8 Securities: Broker to trade US and Hong Kong Stocks (read here)

So yes, 8 Securities does not have holding fees, if I am to buy and hold Hong Kong or US stocks (being a foreigner not residing in HK or US respectively buying these stocks).

I have always been doubtful as to how do 8 Securities earn any commission by not having any holding fees. So I decided to do a small experiment.

Well, I did not actually buy or sell stocks using 8 Securities. My experiment is very simple. I simply transfer USD 50 to and from my 8 Securities account.

So on 7 Aug 2017, I transferred USD 50 from my local bank account to 8 Securities account. Now the exchange rate if I am not wrong (converting from USD to SGD) is USD 1 = SGD 1.36. So USD 50 = SGD 68.

I was notified when transferring online, to pay a transfer fee.

Below, is the statement from my bank account after the transfer. Note that there is another SGD 64.28 on top of the actual amount (SGD 68.55) transferred.

07 Aug 2017	FUNDS TRF – TT 8 Securities Limited	SGD 68.55
07 Aug 2017	SERV CHARGE 8 Securities Limited	SGD 64.28

Now, after I am sure that the amount of USD 50 is reflected in my account, I selected the option to withdraw the amount (without doing a single trade. Then again, what can I buy with USD 50 :p).

I received a phone call from 8 Securities shortly on the next day, asking me if I am certain about withdrawing the amount. And was told that there would again be a fee. I can’t remember the percentage (or absolute amount).

However, the eventual deposit amount I received after the fee is only SGD 37.38 (see below table). Well, the exchange rate might have changed, but not by much. So in effect, just by transferring USD 50 (to and from 8 Securities), I had to pay approx. SGD 95.45 (or USD 70).

I reckon to transfer a larger sum would involve a much larger sum (fee).

25 Aug 2017

INWARD TRF – TT 8 SECURITIES LIMITED-CLIENT ACCOUNT

SGD 37.38

What initially attracted me to 8 Securities was the below 3 key points:

1. Stocks in 8 securities will be held in a nominee account without any holding fees. 
2. No minimum trading activity fee.
3. No minimum deposit requirement.

However, after weighing the transfer fee, I decided not to use 8 Securities.

I reckon, the fee of SGD 2 per counter per month for using a Singapore Brokerage to hold US or HK stocks may not be that great (in comparison to 8 Securities’s transfer fee).