Guide to Opening and Managing a Central Depository Account (CDA)

A Central Depository Account (CDA) is a vital tool for investors looking to trade securities seamlessly in markets like Singapore. Operated by the Central Depository, a subsidiary of the Singapore Exchange (SGX), this account electronically stores stocks, bonds, and other financial assets, removing the need for physical share certificates and ensuring safe, efficient investment management.

This article explains what a CDA is, its advantages, how to set one up, and compares its features with other holding methods.

What is a CDA?

A CDA acts as the main digital vault for all securities traded on the SGX. Investors’ holdings are deposited directly into this account, linked to their brokerage, enabling straightforward buying and selling activities.

Main features of a CDA account

• Secure Storage: Keeps securities electronically secured.
• Direct Settlement: All transactions settle directly with the depository.
• Corporate Actions: Manages dividends, rights issues, and bonuses efficiently.
• Ownership Transparency: Offers a clear view of holdings in one place.

Advantages of a CDA Account

1. Enhanced Security and Ease: Eliminates risks of losing physical shares and simplifies security management.
2. Own Your Securities: Investors have direct ownership, not just custodianship.
3. Automatic Dividend Payments: Dividends and corporate benefits are credited automatically.
4. Effortless Share Transfers: Shares move between accounts smoothly without extra paperwork.
5. Regulatory Safeguards: Operates under Singapore’s financial regulations, ensuring investor protection.

Steps to Open a CDA

To get started, applicants must meet criteria and follow these steps:

• Must be at least 18 years old and not declared bankrupt.
• Have a Singapore bank account for transactions.

Application Process:

1. Prepare documents: NRIC or passport, proof of address, and bank details.
2. Fill out the application form online via SGX or physically submit it.
3. Submit the form in person or through mail.
4. Await approval and confirmation to activate the account.

Comparative Overview with Other Securities Accounts

Feature	CDA	Custodian Account
Ownership	Direct	Indirect
Dividends	Paid directly to owner	May incur processing fees
Settlement	Direct with depository	Via broker or custodian
Transfer Fees	Usually free	Possible charges
Corporate Actions	Managed by CDA	Managed by custodian
Security	High, regulated by SGX	Depends on broker

Fee Structure for a CDA

While there is no account maintenance fee, transaction-related charges include:

• Clearing Fees: 0.0325% of transaction value, capped at SGD 600 per transaction.
• Settlement Fees: Included in broker charges.
• Transfer Fees: Usually free for transfers between CDA accounts.

FAQs

1. Is a CDA necessary for trading stocks in Singapore?

Yes, owning a CDA allows direct securities ownership, though trading via custodians is also possible.

2. Can foreigners open a CDA?

Absolutely. Foreign investors can open a CDA with proper identification and address proof.

3. How do I connect my CDA to my broker?

Provide your CDA details during your broker account registration to link both accounts.

4. Can I transfer securities to someone else’s CDA?

Yes, transfers are possible but require documentation and approval processes.

5. What if I stop active trading?

Your CDA remains, but it won’t incur any maintenance fees until you trade again.

A CDA is key for secure, transparent, and straightforward securities management in Singapore. It empowers investors with direct ownership, automatic dividends, and regulatory safeguards, making it a reliable choice for holding and trading securities.

Understanding its features and comparing it with other accounts helps investors decide on the best approach for their investment portfolio.

References

• Singapore Exchange (SGX) – https://www.sgx.com
• Monetary Authority of Singapore (MAS) – https://www.mas.gov.sg