The Best Broker For Zero Commission Trading

Disclaimer: This is not a sponsored post, but this article contains referral links that allow me to earn referral rewards at no cost to you if you choose to signup with them, which helps me maintain the blog.

Several brokers in Singapore are now offering zero commission trading.

What does this mean and how does it work?

Does this mean trades are completely free?

Which of these brokers are the best?

I’ll be answering all these questions in this post, so read on to find out!

What Is Zero Commission Trading?

As its name suggests, zero commission trading is when brokers don’t charge any commission fees to their users for executing a trade.

This eliminates one of the costs of investing which makes the upfront cost of investing cheaper when compared to other brokers that do charge commission fees.

Note that zero commission is not the same as zero fees – I’ll talk more about other fees that may still be applicable on zero-commission trades later in this post.

How Does Zero Commission Trading Work?

Commission fees are obviously a source of income for brokerage companies, so how can they afford to offer zero commission trading and eliminate this income source?

Well, it turns out that brokers that do offer zero commission trading have found a more effective way to earn money – via Payment for Order Flow (PFOF).

According to Investopedia, PFOF is:

“A form of compensation, usually in terms of fractions of a penny per share, that a brokerage firm receives for directing orders for trade execution to a particular market maker or exchange.”

In other words, these brokers have changed their source of income from commission fees charged to customers to compensation received from market makers.

Now, you’re probably thinking “Market makers? What’s that?”

According to Investopedia, a market maker is:

“A firm or individual who actively quotes two-sided markets in a particular security, providing bids and offers (known as asks) along with the market size of each.”

Simply put, market makers will place both buy and sell trades of the same security at any one time to facilitate liquidity of that security in the market.

They make money by always buying at a lower price (that which retail investors sell at) and selling at a higher price (that which retail investors buy at) – this makes up the bid-ask spread for a particular security.

Since market makers profit off of the trades they execute, whenever a broker directs orders from its customers to them, they will earn a profit, and they give a cut of this to the broker – this is known as PFOF.

Which Brokers Offer Zero Commission Trading?

As of writing this post, there are 4 brokers in Singapore that offer zero commission trading:

• Tiger Brokers
• Moomoo
• Webull
• Syfe Trade

Not all the offerings of zero-commission trades are equal, though, so let’s take a closer look at each broker.

It’s worth noting that while Webull, Moomoo, and Tiger Brokers make money via PFOF, Syfe Trade does not.

Tiger Brokers

Tiger Brokers is offering unlimited commission-free trades for US, Hong Kong (HK), and Singapore (SG) stocks, and China (CN) A-shares.

However, there’s a catch – this promotion is only valid for a limited time.

Commission-free trading for HK, SG, and CN stocks is only available for 365 days from the date of activation of the commission-free card.

New users will receive the card upon opening an account while existing users should have received it back in July.

However, the commission-free card is only valid for 20 days from the date it was received – so if you’re an existing user who didn’t activate it back then, you’ve already lost the opportunity to do so.

Commission-free trading for US stocks is only available for 180 days and will only be received by:

1. Depositing SGD 1,000 into your account, and
2. Making 5 buy trades, each with share price > USD 1,
3. Completing steps 1 and 2 by 12 Oct 2022

Lifetime commission-free trades for US stocks will only be unlocked by referring a friend to Tiger Brokers and having them complete steps 1 – 3 above.

Also, note that Tiger Brokers’ commission-free trades are offered on a rebate basis.

This means that commission fees are still charged when your trades are executed, but will subsequently be rebated back into your account.

Moomoo

Moomoo offers permanent, unlimited commission-free trades for US markets.

Unlike Tiger Brokers, there are no requirements to enjoy this offer.

Webull

Check out my review of Webull here!

Webull offers unlimited zero-commission trades on buy and sell trades, and this extends to both the US and HK markets.

There are no requirements to be fulfilled to enjoy this offer.

Webull also supports fractional share trading for US securities, which is a neat feature to have.

Syfe Trade

Check out my review of Syfe Trade here!

Syfe Trade doesn’t market itself as a broker that offers zero commission trading. Instead, they advertise their free monthly trades feature.

This is a great feature, being applicable to both buy and sell trades, though Syfe Trade currently only supports trading on the US market.

There are no criteria to meet to enjoy Syfe Trade’s free monthly trades, but they are limited in number.

Only the first 5 trades (for the first 3 months upon signing up) or the first 2 trades (after 3 months of signing up) every month are free, with subsequent trades being chargeable with a fee of USD 1.49.

This is unlike the other brokers mentioned above that offer zero commission trading on an unlimited number of trades.

Nevertheless, Syfe Trade’s offering of free monthly trades allows users to execute trades with zero commission, which is why I have included them in this post.

Syfe Trade also supports fractional share trading for US securities.

Are Zero Commission Trades Really Free?

Zero commission is not synonymous with zero fees, as I alluded to earlier.

Besides the commission fee, other fees may be applicable.

FX Fees

Assuming that you’ll be investing in other markets like the US or Hong Kong, you’ll need to convert your currency from SGD to the respective currency.

In doing so, you’ll incur foreign exchange (FX) fees which are priced into the conversion rate offered by the broker, though you won’t be charged an upfront FX fee by any of these brokers.

Here is a summary of FX rates for conversion of SGD – USD for each of these 4 brokers, compared against the mid-market rate (ie Google Finance), at approximately the same time.

Broker	FX Rate	FX Fee (%)
Google	0.7036	–
Tiger Brokers	0.7014	0.31%
Moomoo	0.7014	0.31%
Webull	0.7016	0.28%
Syfe Trade	0.7027	0.13%

The FX fee is computed using the formula:
FX Fee = (Google Rate – Broker Rate) / Google Rate

For USD, Syfe Trade offers the most competitive FX rates.

Regulatory Fees

These are fees that are charged by other entities and are not within the control of the broker.

Each country and stock exchange may impose their own set of regulatory fees, so how much this fee amounts to depends on the exact security you are trading.

For example, for trading in the US, the following regulatory fees are applicable for all sell trades:

1. Clearing fee (charged by Securities Exchange Commission) = total price of transaction * 22.90 / 1,000,000 USD
2. Trading Activity Fee (charged by the Financial Industry Regulatory Authority) = 0.000119 USD per share, max 5.95 USD per trade

These fees are applicable regardless of which broker you use.

Brokerage Fees

Finally, other than commission fees, brokers can also charge other types of fees which may still be applicable on zero-commission trades.

For example, for trading in the US market, Tiger Brokers and Moomoo charge a platform fee on all trades and a settlement fee on sell trades.

Fees	Tiger Brokers	Moomoo
Commission	USD 0.005 / share Min. USD 0.99 / order Max. 0.5% / order	USD 0
Platform Fee	USD 0.005 / share Min. USD 1 / order Max. 0.5% / order	USD 0 (1st year) USD 0.99 / order
Settlement Fee (sell only)	USD 0.003 / share Max. 7% / order	USD 0.003 / share Max. 1% / order

Currently, Moomoo is running a promotion to waive the platform fee for 1 year. After that, it will be charged as normal.

Syfe Trade and Webull currently do not charge additional broker fees, so it is possible to execute trades and incur no fees.

Goods & Services Tax

In Singapore, any fees that are payable are subjected to Goods and Services Tax (GST).

This means if you incur a USD 1 platform fee for executing a trade on Tiger Brokers, you will also incur a GST on that fee, bringing the total fee up to USD 1.07 based on a GST rate of 7%.

Payment For Order Flow

A broker making money from PFOF doesn’t necessarily result in added cost to consumers.

After all, there’s no upfront fee being charged to us.

But it’s been a topic of concern that when brokers engage in PFOF, an implicit cost is brought upon its customers in the form of poor execution price.

When brokers direct trade orders from their customers to market makers, the price at which the orders are executed is out of their hands.

Thus, it’s possible that the market makers who actually execute the trades don’t do so at the best price, allowing them and the broker to profit off of the trade, and pass this cost down to customers.

Robinhood Markets, a popular US online brokerage, was fined by the Securities Exchange Commission for failing to disclose to customers that they received PFOF as a result of poorly executed trades.

I won’t dive into an analysis of the potential impact of PFOF, but here are my thoughts.

I don’t think this affects me too much as a buy-and-hold investor who primarily owns broad-based index ETFs.

Any price arbitration arising from a poor spread is likely to be insignificant in the grand scheme of things 10-20 years later.

Of course, this would be different if you’re a trader who profits off of price arbitration, or if you execute trades at trade volumes high enough to make a significant loss from poor execution price.

Which Broker Is The Best?

So, to answer the question of which of these zero-commission brokers is the best, it depends on which markets you’re looking to invest in.

Best For Casual Investing In US Markets: Syfe Trade

There are several great things about Syfe Trade.

It offers the most competitive FX rates for USD conversions, which will save you cash on currency conversions over time.

It also supports fractional shares, so you don’t have to worry about having uninvested cash idling in your account.

Even though Syfe Trade’s monthly free trades are limited, it should be sufficient for long-term index investors who don’t execute many transactions every month.

However, if you consistently execute more than 2 trades per month, Webull might be a better choice for you.

They offer unlimited commission-free trades while still supporting fractional shares at the cost of marginally poorer FX rates.

Best For Investing In HK Markets: Webull

Only Webull and Tiger Brokers offer zero commission trading for HK markets, and Webull is the clear winner for me.

The reason is simply that Webull doesn’t require you to jump through a bunch of hoop to enjoy this offer in the way that Tiger Brokers does.

Furthermore, if you’re an existing Tiger Brokers customer and you didn’t activate your commission-free card before it expired, you might not even be able to enjoy commission-free trades on HK markets anymore.

Best For Investing In SG/China Markets: Tiger Brokers

This is essentially a non-contest, since Tiger Brokers is the only broker that offers zero commission trading in the SG and China markets.

Do keep in mind, though, that there are requirements to be fulfilled to unlock this offer, and it’s only valid for 1 year.

Also, Tiger Brokers’ fee structure means you’ll still be charged with a platform fee on these commission-free trades.

Platform fee (SG): 0.03%, min. SGD 1 / order
Platform fee (CN): 0.03%, min. CNH 8 / order

Sign Up Rewards

If you’re thinking of using any of the brokers mentioned in this post, there are ongoing sign-up promotions that you can take advantage of.

I have included my referral links in this section – if you’ve enjoyed my content and want to support me, you can do so by signing up using my links.

It goes a long way in helping me sustain this blog and allows me to continue writing posts for all of you.

Thanks in advance!

Tiger Brokers: Commission-Free Trades, 1 GRAB share, And SGD 88

This promotion is valid until 12 Oct 2022.

Tiger Brokers awards their sign-up gifts in 2 stages: account opening, and account funding + trading.

To start, sign up for a Tiger Brokers account via this link.

Once you have successfully opened your account, you will receive the following in your account:

1. Commission-free card for unlimited trades for SG, HK, and China A stocks for 365 days
2. Commission-free card for unlimited trades for US stocks for 180 days
3. 1x GRAB share

Note that the commission-free card is only valid for 20 days and must be activated to trigger commission-free trades.

The count of 365 and 180 days will commence from the date the commission-free card is activated.

To receive the SGD 88 reward, you need to:

1. Fund your account with SGD 1,000 or more in 1 single deposit
2. Execute 5 new buy trades where the individual share price in each trade is USD 1 or more

If you complete these steps, you will receive SGD 88 by 13 Oct 2022.

Webull: Commission-Free Trades, SGD 10 Grab Voucher, And Up To USD 130 TSLA Shares

This promotion is valid until 30 Sep 2022.

Webull also awards sign-up gifts in 2 stages: account registration, and account opening + funding + trading.

To start, register for a Webull account via this link.

This will earn you a free 1-month access to Level 2 US market data (Nasdaq TotalView).

To enjoy commission-free trades and receive the SGD 10 Grab voucher and USD 100 of TSLA shares, you need to fulfill the following criteria:

1. Open a Webull account (using the same details as your registration)
2. Make an initial deposit of SGD 2,000 or more in 1 single deposit
3. Maintain a net cumulative deposit of at least SGD 2,000 (total deposit – total withdrawal, excluding capital gains and losses)
4. Execute 1 stock or ETF buy trade on the US market
5. Complete the above steps within 30 days

To receive a bonus USD 30 of TSLA shares, you need to execute 1 options buy trade on the US market in the same 30-day window as above.

Note that the 30-day window starts from the date your initial deposit is received and settled in Webull.

There is also a minimum trade value of USD 100 for stock and ETF trades.

To qualify for this promotion, only the initial deposit of at least SGD 2,000 must be completed by 30 Sep 2022 – the remaining actions only need to be completed within the 30-day window.

The TSLA shares will be awarded within 7 business days from the date you are deemed eligible for the reward.

Syfe Trade: SGD 10 Cash Credit

To start, sign up for a Syfe account via this link or with the referral code “SRPT54W4C“.

Then, to receive the SGD 10 cash credit reward, you need to:

1. Fund a minimum of SGD 2,000 to your Syfe Trade account
2. Execute 1 buy trade

Note that the SGD 10 reward will be awarded in an equivalent amount of USD, and this cash credit cannot be withdrawn as cash.

The cash credit can only be used to execute buy trades.

To summarise,

Zero commission trading does alleviate the cost of investing for investors, but it doesn’t mean that trades are 100% free.

There are other costs of investing that cannot be avoided such as FX fees and regulatory fees.

Many brokers can afford to offer commission-free trades by making money via payments for order flow (PFOF) instead, though there is some controversy surrounding this practice.

Personally, I think Syfe Trade and Webull are the better brokers over Tiger Brokers and Moomoo due to lesser fees and fractional share trading.

Which of these brokers would you use and why? Let me know in the comments below!