iFast Financial, a unit of mainboard-listed iFast Corp, has launched its stock-dealing service for Singapore listed stocks and exchange-traded funds (ETFs) on its online platform FSMOne.
The move last Friday came after iFast Singapore was admitted as a trading member of the Singapore Exchange (SGX), and a clearing member of The Central Depository.
iFast charges a commission of 0.12 per cent for stock trades and a minimum commission of S$10 per trade. For ETFs, the commission is at 0.08 per cent.
In comparison, most brokerages here charge retail investors about $25 in brokerage fee per transaction to buy and sell Singapore shares online, regardless of the trade's value.
The resumption of iFast's Singapore stock-dealing service comes six months after OCBC Securities, its former counterparty, turned off its connection to the SGX.
OCBC Securities was to have acted as a middleman to execute and settle SGX stock and ETF trades for FMSOne, a platform devised by online unit-trust distributor Fundsupermart.com.
"With the SGX trading membership, we do not have to link up with a counterparty, and we are able to better control the quality of our services for investors. We have also been improving our fintech solutions on FSMOne," iFast chief executive Lim Chung Chun said.
"The good thing that followed the disruption was SGX helped to expedite our admission as trading member to SGX. Within six months, we were up, and we emerged a stronger player," he added.
The introduction of SGX-listed stocks and ETFs broadens the range of products and services being offered on FSMOne, including over 1,100 funds, more than 500 bonds, portfolios, Hong Kong exchange-listed stocks and ETFs, and insurance products.
iFast Corp has assets under administration of about $6.5 billion as at March 31. The group's assets under administration come from its markets in Singapore, Hong Kong, Malaysia, China and India.
Globally, commissions have been on a downtrend, Mr Lim noted, adding that his firm is able to make the cost of investing more competitive because its business model "derives substantial recurring revenue from its assets under administration in funds and bonds".
"The traditional stockbroking model can be costly, with the employment of a team of remisiers to support their clients. FSMOne's model is Internet-based, where investors trade online."
He believes that removing contra trading risk gives his company leeway to offer cheaper commission rates to clients.
Contra trading involves buying and selling the same shares without paying for them. Most brokerages here do not require investors to deposit cash with them before buying a stock. After a transaction, investors have three days to transfer cash to the brokerage to pay for the shares.
There is risk arising from the huge "contra losses" suffered by broking houses when speculative trading gets out of hand and investors start riding on the free credit to take huge bets.
"In Singapore, a large percentage of local retail brokers rely on a contra business model for a substantial part of their revenue. FSMOne's stockbroking service works on a pre-funded basis, meaning investors will need to have cash in their FSMOne cash account before trading in stocks and ETFs. Such a model removes any contra-loss risk for the company," Mr Lim said.