Title: Broadening the Use of Broker Custody Accounts: Enhancing Investor Convenience and Alignment with International Practice
Introduction
The Singapore Exchange Regulation (SGX RegCo) has proposed a significant amendment to the existing rules governing the holding of securities in the Singapore market. This proposal aims to broaden the use of broker custody accounts, allowing retail investors to consolidate their trades and manage all their investments in one place. The proposed rule amendments, which are expected to take effect as early as June 2026, will enable retail investors to hold both Singapore-listed and foreign-listed stocks in a custodian account with their broker, thereby enhancing ease and convenience. This paper examines the proposed changes, their implications, and the potential benefits for retail investors in Singapore.
Background
Currently, retail investors in Singapore have two options for holding their securities: either in a direct account with the Central Depository (CDP) or in a broker custody account with their broker. The CDP is a securities depository and clearing system that provides a safe and efficient way for investors to hold and settle their securities trades. However, the existing rules require retail investors to hold Singapore-listed stocks in a direct account with the CDP, while foreign-listed stocks can be held in a broker custody account.
The Proposed Broker Custody Model
The proposed rule amendments will allow retail investors to hold both Singapore-listed and foreign-listed stocks in a broker custody account with their broker. This model is the main model in major markets and will align the Singapore Exchange (SGX) with international practice, where investors hold securities with brokers in pooled accounts. The proposed model will provide retail investors with a more convenient and streamlined way to manage their investments, as they will be able to view and manage all their holdings in one place.
Benefits for Retail Investors
The proposed broker custody model is expected to provide several benefits for retail investors in Singapore. Firstly, it will enhance convenience, as investors will be able to manage all their investments in one place. Secondly, it will reduce administrative burdens, as investors will no longer need to maintain multiple accounts and track their holdings separately. Thirdly, it will improve risk management, as brokers will be responsible for safeguarding investors’ securities and ensuring that they are properly settled.
Alignment with International Practice
The proposed broker custody model is consistent with international practice, where investors hold securities with brokers in pooled accounts. This model is widely used in major markets, such as the United States, Europe, and Australia, and is considered best practice in the industry. By adopting this model, the SGX will be able to align itself with international standards and provide retail investors with a more competitive and efficient platform for managing their investments.
Conclusion
The proposed rule amendments to broaden the use of broker custody accounts in the Singapore market are a significant development that is expected to enhance investor convenience and alignment with international practice. The proposed broker custody model will provide retail investors with a more streamlined and efficient way to manage their investments, while also improving risk management and reducing administrative burdens. As the SGX continues to evolve and grow, it is essential that it adopts international best practices and provides retail investors with a competitive and efficient platform for managing their investments.
Recommendations
Based on the analysis, we recommend that the SGX RegCo proceed with the proposed rule amendments to broaden the use of broker custody accounts in the Singapore market. We also recommend that the SGX RegCo provide adequate education and training to retail investors on the benefits and risks of the proposed broker custody model, as well as ensure that brokers and depository agents are properly regulated and supervised to safeguard investors’ securities.
Future Research Directions
Future research should focus on the implementation and impact of the proposed broker custody model on retail investors in Singapore. Specifically, research should examine the benefits and risks of the proposed model, as well as the challenges and opportunities that arise from its implementation. Additionally, research should investigate the regulatory and supervisory frameworks that need to be put in place to ensure that the proposed model is safe and efficient for retail investors.
References
SGX RegCo. (2026). Proposed Rule Amendments to Facilitate the Wider Use of Broker Custody Accounts in the Singapore Market.
Singapore Exchange. (2026). SGX RegCo Proposes to Broaden Use of Broker Custody Accounts.
The Straits Times. (2026). SGX RegCo Proposes to Let Investors Consolidate Trades in Broker Custody Accounts.