Differences in local and foreign brokerage firm

As a beginner in stock trading, you would need to open up an account with a brokerage firm in order to begin trading stocks. In the case of Singapore, you have the option to open an account with a local brokerage firm or a foreign brokerage firm.

Should i go for the brokerage firm that has the lowest brokerage fees?

Depending upon your trading style, whether are you a contra trader (without too much capital onhand to buy stock outright), trader(with the capital to buy stock outright) or investors. Local brokerage firm allows you to pay for your stock on T+3 basis. This basically means that you are given a total of 4working days including the day that you bought the stock to pay up for them. However, do bear in mind that this goodwill could be void if you default on your payment. Local brokerage firm charges almost the similar rates for their brokerage service. I shall write up a post detailing the different in cost for these local brokerage firms. You can use your atm (via EPS), internet banking account and walkin to deposit funds into your account. The money will usually be transfer directly into your bank account unless you instructed for cheque when you need to withdraw funds. This process will usually take between 2 to 3 working days.

Foreign brokerage firm on the other hand requires you to place a deposit with them upfront and you can only trade using the amounts that you have deposit with them. Some of these foregin brokerage firm do allow margin trading (a form of credit facilities that allow you to trade x multiples of your deposit). The mode of payment is usually by wire transfer. To withdraw funds, you would usually need to wait for the cheque from them or you can simply request for wire transfer which in this case would require you to pay a fee for this service. The benefit of a foreign brokerage firm is that their brokerage fees are cheaper and you have wider variety of markets available that you can trade.