A Central Depository Account (CDP) is an essential tool for investors who wish to trade securities in markets such as Singapore. Managed by the Central Depository (CDP), a subsidiary of the Singapore Exchange (SGX), this account allows investors to hold stocks, bonds, and other financial instruments electronically. This eliminates the need for physical share certificates, offering a secure and efficient way to manage investments.

In this article, we will explore what a CDP account is, its benefits, how to open one, and a comparative analysis of key features.

What is a CDP Account?

A CDP account serves as a central repository for securities traded on the SGX.

Key Functions of a CDP Account

• Safe Storage : Holds stocks, bonds, and securities electronically.
• Direct Settlement : Transactions are settled directly between the investor and CDP.
• Corporate Actions Management : Facilitates dividend payments, rights issues, and bonus share distributions.
• Portfolio Transparency : Provides investors with a consolidated view of their holdings.

Benefits of a CDP Account

1. Security and Convenience : Since all securities are held electronically, there is no risk of losing physical share certificates.

How to Open a CDP Account

To open a CDP account, investors must meet certain eligibility criteria and follow these steps:

Eligibility Requirements

• Must be at least 18 years old.
• Must not be an undischarged bankrupt.
• Must have a Singapore bank account for transactions.

Application Process

1. Gather Necessary Documents :
   • Copy of NRIC (for Singaporeans and PRs) or passport (for foreigners).
   • Proof of residential address (e.g., utility bill or bank statement).
   • Details of a linked bank account.
2. Complete the Application Form : Investors can apply online via the SGX website or submit a physical application form.
3. Submit the Application : Applications can be submitted through mail or at designated SGX offices.
4. Account Activation : Once approved, the investor will receive confirmation, and their account will be ready for use.

Comparing CDP Accounts with Other Securities Holding Methods

CDP Account Fees and Charges

While a CDP account itself does not have maintenance fees, transaction-related fees apply:

• Clearing Fees : 0.0325% of the contract value (capped at SGD 600 per contract).
• Settlement Fees : Included within brokerage charges.
• Transfer Fees : Free for direct transfers between CDP accounts.

Frequently Asked Questions

1. Do I need a CDP account to trade stocks in Singapore?

Yes, if you want to directly hold your stocks. However, you can also trade through a custodian account, though it comes with different terms.

2. Can foreigners open a CDP account?

Yes, foreigners can open a CDP account, but they must provide valid identification and address proof.

3. How do I link my CDP account to a brokerage?

During the brokerage account opening process, investors will need to provide their CDP account details to link both accounts.

4. Can I transfer my shares to another person’s CDP account?

Yes, share transfers between CDP accounts are possible but may require documentation and approval.

5. What happens to my CDP account if I stop trading?

Your CDP account remains active even if you stop trading. However, it will not incur any maintenance fees.

  A CDP account is an essential tool for investors who want to trade and hold securities in Singapore securely. With its direct ownership structure, automatic crediting of dividends, and regulatory protection, it provides a reliable and transparent method for managing investments.

By understanding how a CDP account works and comparing it with other securities holding methods, investors can make informed decisions on the best way to manage their portfolios.

References

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