How To Reduce Brokerage Fees on Saxo Markets

Fees are a major topic among Singaporean retail investors looking to diversify their investments abroad, and rightfully so. As Joshua Giersch, author of Rich By Retirement sagely states:

The easiest way to improve your investment returns is to pay less in fees”

Simply put, it is one of the very few free lunches in the markets.

Think about it – if you neglect fees and your portfolio happens to pace the indexes because you held index ETFs, you can be sure that you do not beat your index benchmarks after accounting for fees.

Bringing it closer to home, this was how my account P/L looked like between the span of 23rd March to 10th April, before I gave fees the time of my day:

investment returns

Yep that’s right, fees devoured 30% of my capital gains.

To explain this phenomenon, I was realising profits at a clip of around 3 trades per week during this span to capture the rebound off market lows in March.

PDT rules do not apply to account holders of Saxo so I took advantage of that in my swing trades. Therefore when you’re trading at that sort of volume, you naturally incur costs from fees and commissions accordingly.

If you are an investor planning to have holdings in the US markets, this article is for you.

The following content details how fees are usually accrued by investors on Saxo Markets and presents 2 ways to minimise any fees incurred.

Status Quo: Local SGD Deposit to Saxo Account (SGD Base Currency)

The typically process which a Singaporean investor usually undertakes, is to open a Saxo account before funding them through a local bank or electronic transfer.

One seemingly innocuous detail tends to be overlooked by everyone, myself included.

There is a portion during the account opening phase which requires you to select the currency base of your Saxo account. Not knowing any better, most of us would have selected SGD and not thought too much about it.

The issue soon becomes surfaces upon your first trade and the schedule of fees I’ve compiled should make it immediately clear why.

With every holding valued at USD 1000 (e.g. buying 5 shares trading at USD 50) you plan to own, you will incur a cost of 2.48%.

In layman terms, you’re set back 2.48% before any price movement has begun – which is pure bollocks in my humble opinion.

Now you have to wait until the value of your holdings appreciate sufficient to cover your fees before any unrealised profits can be take place. In some instances, you won’t even get to see that light at the end of the tunnel and the red becomes redder.

It gets even more ridiculous when you want to enter a larger position since the currency conversion fees are variable. So the larger your holdings, the more exorbitant your fees.

To illustrate, if you decided to buy 5 Amazon shares at USD 2409.78*, you’ll be set back USD 180.73 (SGD 256.64) just to enter the position.

I haven’t even gone into commissions yet.

Although the commissions are low by industry standards, they are pegged at 0.06% for US equities, with a minimum of USD 4 and maximum of USD 100 per trade. To get the total commissions charged, just simply multiply by 2 (since buying involves executing a trade, likewise for selling).

Therefore, the commissions are fixed at USD 4 per trade up to a position size of USD 6666.67. From thereon, the commissions are variable based on the percentage and it finally caps at USD 100.

But as distilled earlier, if your position is going to be as large as USD166,666.67, expect your conversion fees to be exorbitant too.

Fortunately, there are ways you can seek to circumvent this issue if you’re on Saxo but do not want to switch brokerages.

*(CAA 17/05/20)

Method 1: Opening a Saxo Sub-account (USD Base Currency)

One way is to open a sub-account under your main Saxo account.

The reason we do this is because Saxo does not allow account holders to change the base currency of their account. The only way to effect a similar change is to open a  sub-account which can be denominated in any currency of your selection.

Here is the schedule of fees assuming similar trading conditions to the status quo example:

As you can see, the fees incurred for each holding is markedly less due to the omitting of currency conversion fees and each trade becomes less than a percent of your position.

“But, won’t I still incur conversion fees when I transfer SGD from my SGD based Saxo account to this USD sub account?”

Aaaand you’re correct!

This method is not fool-proof – you will still unfortunately incur currency conversion fees similar to the rates mentioned in the status quo example. So what exactly is the benefit?

The benefit lies during trade execution.  

Remember the picture I showed you containing my account P/L? The substantial costs were due to me executing a relatively high volume of trades to realise my profits and incurring conversion costs over and over again.

This method effectively removes currency conversion fees for future trades since your account is denominated similarly to the markets. Furthermore, you can hold the USD as cash within the sub-account for future trades.

The only time you will see currency conversion fees will be during fund transference between accounts. Other than that, you can bid it au revoir.

The only drawback is that there is a minimum AuM requirement to open a sub-account, which is set at SGD 10,000 or equivalent. I do think there are ways around this issue, based on anecdotal evidence. Please personally contact me if you wish to know because I understand Saxo does this on a discretionary basis only.

Method 2: Using a 3rd Party Multi-currency Account with Saxo Account (USD Base Currency)

This method takes what we discussed in method 1 to another level by improving on inefficiencies in Saxo’s FX spread. It does not matter if the Saxo account is a sub account or main account, as long as it is denominated in USD.

Method 2 allows investors to leverage Saxo’s industry low commission fees and aims to completely remove Saxo’s currency conversion fees, replacing it with a 3rd party providing competitive FX rates.

Investors can opt to open a multi-currency account at any 3rd party money transfer service provider such as Revolut SG or TransferWise, converting their SGD to USD there to reduce currency conversion costs.

They can then transfer their USD to Saxo and credit their Saxo accounts accordingly.

Using TransferWise as an example:

The currency conversion fees charged at Transferwise (0.58%) is less than that of Saxo (0.75%).

While these percentages seem miniscule and negligible at first, it gets significant when your holdings start to increase so it is always good to set out a system to mitigate costs in the long run.

A major disadvantage lies in having to wait a business day for the funds to be credited into your Saxo account. Utilising Saxo’s conversion function allows you to transfer SGD directly to your Saxo account which can be done almost instantaneously via PayNow or FAST transfer. The ultimate decision lies in deciding between speed or additional costs – only you can make that call.

What does this mean for the Layman Saxo Investor?

Understanding the fee structure if your trades are one of the paramount things an investor should consider.

Being conscientious and ascertaining all costs incurred while utilising your brokerage can be viewed as a first step to fundamental analysis, which is far more complex than viewing a few percentages in a fee schedule.

Saxo is definitely not the only brokerage for Singaporeans to use in their efforts to achieve geographical diversification. There are a couple of websites which have done an outstanding job comparing online brokerages with international exposures, such as this.

I would highly recommend US focused investors looking to open an account with Saxo, select USD as their base currency denomination. However, if you are looking to deploy your Saxo portfolio internationally, then perhaps selecting the SGD base would still be better since it provides you more flexibility in your home currency than having to convert to USD first and incurring needless conversion costs.

35 thoughts on “How To Reduce Brokerage Fees on Saxo Markets”

  1. I learnt my lesson the hard way when I bought US stocks with my SGD account as well. The conversion fees were obscene and after some Google-ing, I came across the sub-account method too and did exactly like you said – I used a mix of funds from converted via Revolut and some via Saxo’s inter-account F/X conversion to shore up my USD account for trading. What I want to know now is how do I withdraw my USD now without doing another inter-account F/X conversion to SGD? Is opening a multi-currency bank account the only other way? I’m asking because I have decided to move to IBKR instead.

    1. Hey DT,

      Wonderful to hear that you used Revolut! I personally have yet to use them but I’m glad someone else did to avoid the obscene conversion rates.

      I don’t use IBKR but I went to do some reading up on their funding procedures to get a better understanding before answering you. The prevailing argument is that IBKR charges very competitive spreads in the event you want to convert SGD to any other currency.

      However, since we’re looking to minimise costs for you and bearing in mind that you already have USD in your sub-account, the most cost-efficient way would be to open a multi-currency account to remain within boundaries of USD currency.

      Do note though, this is where it differs because you can either open an MCA with a bank or a third party service like TransferWise. I’ve put the link down below which compares the rates TransferWise charges compared to the DBS MCA. The former charges USD 1.40 in totality as opposed to SGD 10 for the latter.

      Regardless, this method will only require you to pay fees at a single point:
      1) Cash withdrawals from Saxo are free
      2) Outgoing transfer fee (TransferWise) or Receiving Fee (DBS MCA) charged by your MCA provider

      This seems to me like the most cost-efficient way to stay in the USD and avoid any unnecessary fees – especially since your capital is likely large now.

      Hope I’ve helped in some way and thanks for reading!

      Link: https://transferwise.com/sg/blog/dbs-multi-currency-account-sg

      1. Hey Guys,

        Thanks for this article / comment. This is very informative. I also just discover this 0.75% conversion rate and almost fail off my chair.

        At this point, most of my portfolio is already in US stock, so I guess I already paid the 0.75% from SGD to USD. But I am really decided to avoid this on the way back.

        I just submitted the request to open a subaccount with Saxo in USD. If approved, I assume I will be able to close US positions and direct the P/L to this subaccount. So if I want to reinvest in US stock market, I won’t have to pay this bloody 0.75% conversion rate, since I will own USD already. Is my understanding correct?

        I am also going to inquire about opening a USD account with UOB. So if i need to withdraw from Saxo, it will be in USD and land on a USD account. So in theory, no conversion fee. I then have the freedom to find a way to convert USD at the cheapest rate possible (If i ever want to convert). Is my logic correct?

        Thank you very much!

        1. Hey Pierre,
          Thank you for the response! I’m glad this post managed to provide some clarity – this is the sort of value I hope to drive to my readers moving forward.

          If approved, I assume I will be able to close US positions and direct the P/L to this subaccount. So if I want to reinvest in US stock market, I won’t have to pay this bloody 0.75% conversion rate, since I will own USD already. Is my understanding correct?.

          Yep you are right! You’ll be transacting in USD from now within the sub-account which means that your conversion fees will be around the 8 USD range.

          So when you open a sub-account with Saxo, they will transfer your equity positions to your USD sub-account at no cost. You just have to fill in an Excel spreadsheet (which they will direct you to) and send to them via the contact submission ticket module. The whole process takes 1 business day if I remember correctly.

          I am also going to inquire about opening a USD account with UOB. So if i need to withdraw from Saxo, it will be in USD and land on a USD account. So in theory, no conversion fee. I then have the freedom to find a way to convert USD at the cheapest rate possible (If i ever want to convert). Is my logic correct?

          If you withdraw the funds to a USD account, you will incur no conversion fees. However, there usually are fees attached to incoming funds denominated in USD for local banks so you’ll have to manage that.
          The rest of your logic for that paragraph is correct. Aside from the 3rd party conversion firms, I do recommend looking into FSMOne for converting USD to SGD because of their relatively competitive spreads.

  2. Par Shang Ming

    Hey, great article! I’m trying it out. Just wondering, how do you transfer directly from Revolut to SAXO? Just using the bank details provided by SAXO? This is because when I look at the funding methods on SAXO’s website, it says that there’s only 2 ways to transfer USD to SAXO- using telegraphic transfer which incurs a high transfer and processing fee or using card transfer which has a 0.3% transfer fee. Are we able to use revolut directly to transfer into SAXO?

    1. Hey Shang Ming,

      I personally do not use that method but I went to ask around and read up on the topic to get a better grasp of the question.

      Saxo’s account funding process requires a receiving bank which acts as an intermediary. So there is no established way to transfer straight to Saxo bank in order to fund your account.

      So yep, it seems like the only to transfer major currencies, such as the USD, will be through TT, card transfer or a HSBC bank account transfer.

      Hope this helps!

  3. I think the Revolut-Saxo method doesn’t work anymore.I have been trying to send USD from Revolut to Saxo through bank transfer but the funds just keep getting rejected. That said, before 24th may I did successfully sent some amount of USD over to Saxo. I think Saxo might blocked off this method of funding thier account as it may not be as profitable for them.

    1. Hey Jk,

      Thanks for the heads-up! I’ll look into this and update the article accordingly. Might give Saxo a call to ascertain their situation.

      1. Hello,

        Same rejection is happening to my Revolut USD transactions to Saxo’s HSBC… Do you get any update from Saxo?
        Using Revolut card transfer incur fees about 2.8%!
        It would be nice if they allow bank transfer funding from Revolut though.

        1. Hey Rick,
          No reply from Saxo yet. Raised a couple of support tickets and called their office which has put me on hold for quite a while now. Think they are suffering from an influx of new account openings unfortunately. Will update as soon as I get any replies but in the meantime, it does seem like using the intrabank FX rates of 1.5% makes more sense than Revolut. Have you tried TransferWise?

          1. Hello,
            Thanks for your update.
            I only have Revolut at the moment.
            I tried transferring from DBS MCA to Saxo will charge around SG$20 fees excluding the agent bank fees…
            As you said, seems like letting Saxo to do the exchange would be better now.

  4. Hi,

    Thank you for the valuable insights and potential pitfalls that layman might end up in. This save us alot of unnnecessary cost and lessons.

    May I conclude that by setting the Saxo based currency at USD (which I have already did), I can skip all the hassle of setting up sub-Saxo account and/or any DBS MCA/Revolut SG/Transferwire and what-so-ever. I just need to do a PayNow or FAST transfer from my OCBC 360 to my USD-based Saxo account will do the same job?

    1. Hey Pip,
      Not exactly! For transferring of USD is not a function allowed by FAST or PayNow according to their website here. Therefore you’d probably have to do a TT transfer which itself entails its own set of costs.

    2. Hi all!

      Need some advise with regards to the conversion fee (0.75%).

      Currently I have a SGD base account with Saxo and looking to open a sub account under USD.

      Does this mean I’d have to first transfer money into my SGD account and then transfer that amount to my USD account? In this case how much conversion fees/ exchange fees would I incur?

      Also, when I want to take out the funds, do I have to transfer back from the USD account back into the SGD account in order for me to withdraw it to my bank?

      Much appreciated and sorry for the long winded queries! Tried calling Saxo to find out but they couldn’t seem to get my queue >.<

      1. The conversion cost is the same whether you buy a USD stock in your SGD account, or you transfer money into your SGD account and then transfer it to your USD sub account.

        So the benefit of the USD sub account is that it holds your money in USD. i.e. if you sell some stocks and want to hold USD, then use that USD to buy more USD stock, you won’t keep changing unnecessarily between SGD and USD.

        If you only have a SGD bank account then you have to transfer from your Saxo USD sub account back to your Saxo SGD account to transfer to your SGD bank account, in which you’ll get the same 0.75% currency conversion cost.

        Or you can open a USD bank account and then your Saxo USD account can transfer directly to that.

  5. Hi, I am currently using transfer wise to my Saxo account (USD denominated). I am quite taken aback when I transferred USD 800 from TW to Saxo to see that only USD 785 was received. When I checked with saxo, apparently the intemediary bank might have charged USD 15 for the transfer to the singapore account. These fees are excluding the SWIFT fees charged by TW. Has anyone experience such a thing?

    1. Just transfer your SGD to Saxo, then transfer to your USD sub account..
      If the Transferwise cost is so high/similar, I’d rather pay that cost to my broker/platform than Transferwise which is nothing but a fancy app wrapped around essential banking services – in the end you still have to pay them the fees.

      Saxo does so much more than Transferwise and deserves your support!

  6. Hi, thanks for the article! Very helpful.
    What do you think of the following option:
    1st Step: Deposit funds into Saxo SGD account
    2nd Step: Transfer money from Saxo SGD account to Saxo USD subaccount .

    I just did it and it worked fine. The difference to transferwise was only -0.2% for 1000 SGD. Not sure if I missed something but this way seems quite simple and straightforward.

    1. Hey Fabian,
      Yep, I’m all for your method. It’s the most straightforward and fuss-free option in my opinion.

      I use the exact same method actually, as detailed in my post. It’s the most simple and straightforward but the caveat lies in having 10k SGD to open a sub-account – which is the main reason why I created this post.

      1. Oh, got it.

        When I did the transfer between accounts I thought there was no conversion fee at all at Saxo. However, just realised it was simply that the conversion fee was (almost) the same as transferwise (around 0.7%) which made me believe that. In short: everything you said above is correct 😉

        1. I find it quite funny that Transferwise can be almost as expensive as the spread in Saxo.

          They aren’t even a trading platform, all they’re doing is converting and sending money for you and yet their rates are close to a broker?

  7. I am trying to withdraw from my Saxo USD denominated account to my UOB USD currency account.

    A test withdrawal of 100 USD is left with 92.76 USD.

    Any idea what are the charges or if there is a more efficient and economical way of transferring?

    Thanks in advance!

  8. Great Post.
    I have recently opened my Saxo USD base account. But I haven’t transferred any money yet. I checked with Saxo team and they said you can still change the base account from USD to SGD until the first transfer/transaction is performed by me.

    —if you are looking to deploy your Saxo portfolio internationally, then perhaps selecting the SGD base would still be better since it provides you more flexibility in your home currency than having to convert to USD first and incurring needless conversion costs.—

    I read somewhere the above comment you posted, could you please elaborate more on this?
    for e.g., If I am looking for international portfolio (though majority I will be investing in US market), There will be still intra-account currency conversion fees charged i.e. SGD-USD (if buying stocks in US market) or SGD-GBP (if buying stocks in UK market) or any other market. So how selecting SGD base will be better ?

    1. He means that if you’re gonna be holding positions in all kinds of currencies, having an SGD account is “neutral”. You incur conversions to get your foreign holdings, e.g. SGD->EUR, SGD->HKD etc.

      But you won’t get a double conversion of having a USD account but buying non-USD assets , i.e. SGD->USD->EUR, SGD->USD->HKD.

      If you’re gonna be majority US market, then just have a USD account

  9. I created a Saxo account and changed the base currency for my main account to USD. I saw that as of July, TransferWise does not work anymore as thrid-party transfers are not supported. I used PayNow to transfer SGD to Saxo’s HSBC SGD account, which automatically converts it to USD for my Saxo account. The rate is competitive, at direct exchange rate of 0.723249 on 14 Aug and no fees. The transfer was immediate. I’m primarily trading with Saxo for US stocks only so this method works for me.

    1. hey is there any way to avoid the ‘currency p/l’ because I traded US stocks in SGD on saxo because I didn’t know better last time? this has caused me to lose close to 50% of my profits (unrealised) so this is very troubling ;-;

      1. If your losses are close to 50% of your profits from currency, then its likely that its due to the exchange rate and not Saxo currency conversion cost. They only make 0.75% from each trade.

        You probably bought your position when USD was expensive earlier in 2020, and now it is weaker.

        That being said, your profits can’t be that high if half of it can be lost due to FX.

        Suggest you evaluate your investment decisions/stock picks rather than rack your mind over FX since that is something out of your control.

  10. I understand this is a very detailed, in-depth discussion on the topic of avoiding Saxo’s 0.75% currency conversion costs, but I would like to add a different perspective to balance the discussion.

    I don’t think that Saxo’s rates are ridiculous, “Transferwise (0.58%) is less than that of Saxo (0.75%)”. Sure the Transferwise rates are lower, but you’ve got to remember that all they did was change money for you. Saxo offers you a trading platform and app that is great and has many powerful tools. All you can do with Transferwise is exchange money, so do cut Saxo a little slack.

    With their trade commissions pretty low, there must be some way to bring home the bacon. Running the servers to provide you the platform on desktop or mobile app isn’t cheap, and also paying for the development and improvement of the software isn’t cheap too. Maybe because I am an engineer so I am aware and appreciative of the effort involved in making a great piece of software.

    Another thing – don’t miss the forest for the trees. While I see so many here nitpicking about the 0.75% rate, getting their knickers in a twist wondering how to fund Saxo USD account, Revolut transfers being refunded etc.. Maybe spend the same amount of effort on your investment research and you’ll make back many fold of that little currency conversion cost.

    And to the author, your line “In layman terms, you’re set back 2.48% before any price movement has begun – which is pure bollocks in my humble opinion.” isn’t humble at all. That’s a pretty reasonable charge per trade for all the functionality the Saxo platform offers, and the operational overheads of holding securities, paying HSBC (the one who holds client funds and stocks) their dues. Sure you might be feeling the rate is a little high and thats fine, but your language seems to suggest a sense of entitlement, that they should do your trades for you and not make much of anything at all. That is anything but humble.

    You mentioned you do swing trades and volume, maybe that’s why the fees bite you so much. Maybe consider less churn and more buy and hold. If you aren’t at the Saxo tier where you get lower rates then don’t try to “play like the big boys” with high frequency trades at lower rates.

  11. Hi, in relation to the discussion on SAXO platform, understand that they dun charge any custodian fee for SG stocks, but they do levy custodian fee for all other foreign stocks. My question would then be why not opt for ifast platform when they do not levy any custodian fee on any stocks for investors who intend to hold stocks on long term basis? Or did I miss out other fee components that I am not aware off with ifast platfrom? Wld love to hear some comments. Thanks in advance

  12. Chloeingelical

    Hi I would like to ask more about the saxo account. I have too many US stock in sgd account. What you said is true. The conversion rate and also my profit became my loss 😭 Please help me. Can they convert the US stock in sgd to my usd account?

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