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US Market: Which Currency To Choose?

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For US market, it is common to get confused with trading currency, settlement currency and the different payment modes. This article will explain how it all works:

Firstly, when you trade US stocks, there are 2 parts with regards to currency:


1. TRADING CURRENCY

This is the currency that the stock trades in. All US stocks are trading in USD.
Here's some examples:

 

Online Trading Platform


Mobile App





2. SETTLEMENT CURRENCY

This is the currency you want to make/receive payment in.
If you buy US stocks, you can choose settlement currency to be in USD or SGD. When you place an order, the settlement currency is set to USD by default. Here's some examples:

 

Online Trading Platform


Mobile App




WHICH SETTLEMENT CURRENCY DO I CHOOSE?

 

BUY TRADE

★ Choose USD if you have one of the following intentions:

  • Want to make payment with USD from a USD Bank Account
      • This option helps you to avoid currency exchange.
      • Generally, you would already have a USD Bank Account (locally) or a Multi-Currency Bank Account (locally).
      • Payment to us can be via:
          • USD Cheque dropped at quick-deposit box of StandChart Bank. Deposit cut-off time is 12noon for cheque to clear next day 2pm. For example, for funds to be received at Lim Tan on Tues, you will need to drop USD Cheque on Mon before 12noon. (Ask Lyndell for bank details); or,
          • USD TT transfer. There may be bank charges. Please allow time-buffer for funds transfer. (Ask Lyndell for bank details).
  • Want to make payment with USD from your USD Trust Account
      • This option helps you to avoid currency exchange.
      • Your US trading account comes with a USD Trust Account. Read more about Trust Account here.
      • Payment to us will be via auto-deduction from your USD Trust Account. 
      • You may arrange a standing instruction for all USD payments (buys and sells) to be automatically made to/from your USD Trust Account. (Ask Lyndell for the form) (Best arrangement for USD payments!) 
  • Intend to contra off (ie. sell off) within 4 days
      • This means that both the buy and sell are in USD, hence the contra profit/loss can be computed in USD. 
      • However, let's say you changed your mind and decided to make payment instead, then you may also contact Lyndell arrange payment in SGD.

★ Choose SGD if you have one of the following intentions:
  • Do not have any USD and want to make payment in SGD
      • This usually happens if you want to keep the stock for the longer term.
      • Payment to us can be via:
          • EPS/GIRO/Bill Payment/PayNow/SGD Cheque or deduction from your SGD Trust Account (similar to payment for SG stocks).

 

Note: To know more about payment due date for US Market, please see this article on US Market: Payment Timeline.


Buy trade - Payment summary for different currencies
 

 

 

SELL TRADE

★ Choose USD if you have one of the following intentions:

  • Want to receive payment in USD to put into your USD Bank Account
      • This option helps you to avoid currency exchange.
      • Payment to you will be via:
          • USD Cheque posted to you (default). You will then bank it in your USD Bank Account (locally) or in a Multi-Currency Bank Account (locally).
  • Want to receive payment in USD to be kept in your USD Trust Account
      • Usually, this is because you intend to use the USD to buy stocks again. 
      • You may arrange a standing instruction for all USD payments (buys and sells) to be automatically made to/from your USD Trust Account. (Ask Lyndell for the form) (Best arrangement for USD payments!) 
  • Are contra-ing off your buy position
      • This means that both the buy and sell are in USD, hence the contra profit/loss can be computed in USD.
      • Caution: If you have buy and sell in different currencies, you will suffer 2 times currency exchange, which will slice off your profits/add to your losses. The trade that is in USD will have to be converted to SGD, so that the contra profit/loss can be computed in SGD.

★ Choose SGD if you have one of the following intentions:
  • Want to receive payment in SGD into your Bank Account
      • Payment to you can be via:
          • EPS/GIRO to your SGD bank account (similar to payment for SG stocks).
  • Want to keep the SGD funds in your SGD Trust Account
      • You may arrange a standing instruction for all SGD payments (buys and sells) to be automatically made to/from your SGD Trust Account. (Ask Lyndell for the form)

 

Sell trade - Payment summary for different currencies

 

TO CONCLUDE

The best arrangement for USD trades to reduce currency exchange loss is to:

  • Always select settlement currency as USD
  • Have a USD standing instruction in place for your USD Trust Account
  • If you don't have USD on hand, make your first USD trade settlement currency in SGD. Subsequently, all settlement currencies in USD.

Note: To know more about payment due date for US Market, please see this article on US Market: Payment Timeline.

 

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