Guide to Central Depository Accounts (CDP): Everything You Need to Know
This article provides an in-depth overview of Central Depository (CDP) accounts used in Singapore for secure and efficient securities trading. It explains how to open, use, and compare CDP accounts with custodian alternatives. Key features include direct ownership, automatic dividend credits, and regulatory safeguards. The guide covers account setup procedures, fee structures, and frequently asked questions, helping investors make informed decisions about their securities management strategies. A must-read for those interested in Singapore’s investment ecosystem.
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Guide to Central Depository Accounts (CDP): Everything You Need to Know
A Central Depository (CDP) account is a vital component for investors engaging in securities trading on the Singapore Exchange. Managed by the Singapore Exchange's subsidiary, the Central Depository, this account enables investors to electronically hold stocks, bonds, and other assets, removing the need for physical certificate handling. This system ensures secure, streamlined management of investment holdings.
This article covers what a CDP account is, its advantages, how to set one up, and key features comparison.
What Is a CDS Account?
A CDP account acts as the main hub for securities traded via the SGX.
Trade transactions on the SGX result in securities being deposited directly into the investor’s CDP account. Linked to their brokerage, this setup facilitates smooth buying and selling activities.
Core Functions of a CDP Account
Secure Electronic Storage: Maintains stocks, bonds, and securities digitally.
Settlement Processing: Facilitates direct transaction settlement between investor and CDP.
Corporate Actions Management: Handles dividends, rights issues, and bonus shares.
Holdings Visibility: Offers investors a consolidated view of their portfolio.
Page Benefits of a CDP Account
Enhanced Security & Ease: Reduces risks associated with physical certificates, providing convenience.
True Ownership: Investors directly own their securities rather than through a third-party custodian.
Automatic Dividend Credit: Dividends and corporate actions are automatically credited to linked bank accounts.
Effortless Share Transfers: Securities can be moved between accounts easily without extra paperwork.
Regulatory Safeguards: Operates under MAS regulations to ensure investor protection.
Steps to Open a CDP Account
To establish a CDP account, applicants must meet specific criteria and follow these procedures:
Eligibility Criteria
Be at least 18 years old
Not be an undischarged bankrupt
Possess a Singapore bank account for transactions
Application Steps
Prepare Required Documents:
NRIC or passport copy
Proof of address (utility bill, bank statement)
Bank account details for linking
Fill Out Application: Apply online via SGX or submit in person.
Submit Application: Send via mail or visit SGX offices.
Account Activation: Await confirmation upon approval; account ready for use.
Comparison of CDP and Custodian Accounts
| Feature | CDP Account | Custodian Account |
| Ownership | Direct | Indirect |
| Dividends | Paid directly to the investor | May incur processing fees |
| Settlement Process | Direct with CDP | |
| Transfer Fees | Typically free | May carry charges |
| Corporate Actions | Managed by CDP | |
| Security Assurance | High, backed by SGX |
Fees for a CDP Account
While maintaining a CDP account involves no ongoing fees, certain transaction charges apply:
Clearing Fees: 0.0325% of trade value, capped at SGD 600 per contract.
Settlement Fees: Covered by brokerage charges.
Transfer Fees: Free for transfers within CDP accounts.
FAQs
Is a CDP account necessary for stock trading in Singapore?
Yes, for direct securities ownership. Alternatively, trading via custodian accounts is also possible but differs in terms.
Can foreigners acquire a CDP account?
Yes, foreigners can open CDP accounts with valid identification and proof of residence.
How do I link my CDP to a brokerage?
Provide your CDP details during brokerage account registration to establish the link.
Can I transfer shares to another person's CDP account?
Yes, transfer is permitted but may require approval and documentation.
- What if I stop trading?
Your CDP account stays active, but no maintenance fees are charged unless transactions occur.
A CDP account offers a safe, efficient, and transparent way for investors to hold and manage Singapore securities. With direct ownership, seamless dividend credits, and strong regulatory oversight, it’s an essential tool for modern investing. Understanding its features helps investors optimize their portfolios effectively.
References
Singapore Exchange (SGX) – https://www.sgx.com
Monetary Authority of Singapore (MAS) – https://www.mas.gov.sg
