CommSec -Overview of Minimum Deposit, Spreads & Leverage

BASIC INFORMATION:

CommSec is an online stockbroker offering trading on shares and options. CommSec, also known as Commonwealth Securities Ltd, is a subsidiary of the Commonwealth Bank of Australia. This firm is regulated by the Australian Securities and Investments Commission (ASIC) and carries a recognizable yellow logo. CommSec claims to be Australias leading broker and mainly caters to those who are residents in the country. Cobra Trading was regulated by the Australian Securities and Investments Commission (ASIC) at the Australia with the regulatory license number of 238814.

MARKETS

Shares

Clients can perform Australian share trading directly with CommSec, for example on the ASX 50 or the ASX 200, also known as XJO. Traders can choose organisations manually or using a ‘share pack’ which is selected by the broker from leading companies.

If a company chooses to pay a dividend to shareholders, the client will receive a statement. Traders can then take the cash or use a reinvestment dividends plan (DRP) if offered. Some shares may be ‘XD’ which means if purchased at that time, a buyer will not receive the most recent dividend.

International Markets

Using a CommSec International Securities Trading Account, clients can also trade in 25 global markets, including US and Hong Kong shares as well as stocks on the NASDAQ. Traders can also sign up to receive IPO notifications to stay on top of new offerings.

This broker also appears to offer forex in international markets, though details are limited.

Options

Exchange-traded options, or simply options, are contracts that give clients the right to buy or sell a certain security for a specified price within a given timeframe, usually between investors. CommSec offers trading in many markets including US options, although potential traders should be aware that they may have to pass an ‘options knowledge test’ before they can access the market.

Exchange-Traded Funds (ETFs)

The brokerage offers all ETFs listed on the ASX, for example the Vanguard Australian Shares Index ETF which includes 300 of Australias foremost companies. These securities are traded like shares with a $500 minimum investment and can be used to monitor the performance of bonds or indices like the S&P 500.

Warrants

CommSec also offers warrants to allow traders to benefit from market changes, with increased leverage compared to options. These are issued directly from the company holding the asset.

Fixed Income Securities

Sometimes known as interest rate securities, fixed income securities involve the investor loaning money to a party that will pay interest or dividends for the duration of the loan. For example, CommSec offers Australian government bonds.

As of 2020, CommSec no longer offers CFD trading. As such, clients cannot buy assets like gold. This broker also appears to have stopped advertising managed funds, although these can be added manually to a clients portfolio if held elsewhere e.g., in an mFund, and are accepted in a Margin Loan. The firm also does not offer trading on cryptocurrencies such as Ripple (XRP) and Bitcoin (BTC).

TRADING FEE

CommSec has a complex fee structure and clients should consult the website for full details of each asset:

· Australian shares, ETFs, warrants, and fixed income securities have a $10 fee for trades up to $1,000, decreasing as a percentage with the transaction value

· Trade using deceased estates at rates of $59.95 up to $10,000, with fixed percentage fees for larger transactions

· Options investing incurs a minimum of $34.95 up to $10,000 for internet trading, and this rate increases if executing over the phone

· Small fees of $0.05-$0.45 are also charged depending on the contract type

LEVERAGE

CommSec offers an award-winning Margin Loan, which traders can take advantage of to widen their portfolio with borrowed funds. The interest rate is a minimum of 5.63% p.a., and the broker provides a calculator on their website. CommSec also publishes a job and industry classification list which may assist traders in their loan application.

ACCOUNT TYPES

Clients who wish to open a CommSec account have several options depending on their intended investment activity. It should be noted that application is generally closed to non-residents and those under 18, although you can get a CommSec account to act as a trustee until a minor turn 18.

Share Trading Account

Clients can trade a range of assets with this CommSec account, including shares, ETFs, options, and warrants. Trades up to $25,000 can be executed without a deposit, and there are no account keeping fees. Note that this is purely a trading account and a separate cash account is required for settlement.

International Securities Trading Account

This CommSec account is ideal for clients wanting to take advantage of international trading, as more than 25 leading share markets are offered. US options and US ETFs are covered by this account via the International Trading Desk. Trading fees are higher for this account and extra charges such as an annual $25 account inactivity fee apply.

Margin Loan

As covered above, the Margin Loan offered by CommSec allows clients to borrow investment funds, while transferring existing assets into the account as collateral. ETFs, options, and shares are all available to trade with this account. Interest fees apply, and although no account keeping fees are charged there are other maintenance fees to be aware of.

Commonwealth Direct Investment Account (CDIA)

The CDIA, also marketed as ‘your cash account’, is the recommended account that traders use for settlement. Clients can earn interest on funds in this account and it also offers the lowest brokerage rates. The CDIA has unlimited electronic withdrawals without fees, although other charges may apply.

Options Account

This account type is intended to be used alongside other CommSec accounts and may be useful if clients are interested in using more complex options trading strategies, or if they want to safeguard the value of their current portfolio. Unlike other accounts using the T+2 system, trades are settled after one business day so your funds are available more quickly.

CommSec One

CommSec One is a program designed for active traders to improve their outcomes using one-to-one support plus additional alerts, trading tools, and order types. It is free to join but clients must meet one of three eligibility criteria: $30,000+ brokerage spend (annual), $100,000+ Margin Loan balance, or $2.5 million+ in holdings.

Access

Prospective CommSec clients can register to submit an application for a trading account, then sign in with their client ID to access the share market. Traders can also access via NetBank, although login details will be different.

PAYMENT METHODS

Clients wondering how long it takes to settle trades will be interested in CommSecs T+2 settlement system:

· Clients that have sold assets will receive the funds into their nominated account two business days after the trade has taken place

· Buyers must have payment funds available in their account by 8 am on the second business day or will be subjected to a late settlement fee

· An estimated settlements calculator is available on the CommSec website in the home section

· If clients wish to buy and sell on the same day, the broker can use a system called contra settlement to cover the difference between the trades

TRADING PLATFORMS

· CommSecIRESS

TRADING HOURS

Clients can use the CommSec website 24 hours a day, although trading hours for the ASX are 10 am – 4 pm. International trading hours vary by time zone and region.

CUSTOMER SUPPORT

CommSec clients can contact customer support through several channels. The support line can help with queries like an update to address details, or how to close a CommSec account:

Phone number:

· 13 15 19 (within Australia)

· +61 2 9115 1417 (outside Australia)

· +1300 361 170 (International Desk)

Address:

· Locked Bag 22 Australia Square, NSW, 1215

Email for CommSec Pocket:

· pocket@commsec.com.au

The website also hosts a contact form and specific contact details for each asset.