When investing in the Australian stock market through CommSec, understanding your trading limits is crucial to managing your investment strategy effectively. While CommSec offers convenience for Commonwealth Bank customers, there are several limitations worth considering, particularly if you don’t have a Commonwealth Direct Investment Account (CDIA).
Standard Trading Limits
By default, CommSec provides most customers with an initial $5,000 trading limit. Within this limit:
- $5,000 can be used to purchase leading stocks (currently limited to ANZ, BHP, CBA, CSL, MQG, NAB, RIO, TLS, WBC, and WDS)
- Only $1,000 of that limit can be allocated to non-leading stocks (any stocks not on the leading stocks list)
This restrictive tiered approach can be particularly limiting for investors looking to diversify beyond blue-chip companies or make larger investments in promising mid-cap stocks.
CDIA vs. Non-CDIA Accounts
The real limitation becomes apparent when comparing CDIA holders to those without:
With a CDIA:
- Your trading limit increases based on your CDIA balance (potentially a multiple of it)
- The market value of your existing CHESS-sponsored shares may further increase your limit
- More flexibility for larger trades without additional steps
Without a CDIA:
- Stuck with the basic $5,000/$1,000 limit structure
- Limited ability to execute larger trades efficiently
- Fewer options for increasing your trading capacity
Phone Orders: The Only Alternative (With a Cost)
If you want to place an order exceeding your trading limit without a CDIA, your only option is to call CommSec directly. While this provides a workaround, it comes with significant drawbacks:
- Higher Brokerage Fees: Phone orders incur substantially higher brokerage fees compared to online transactions
- Time Constraints: You’re limited to business hours and may face wait times
- Less Convenience: The inability to quickly execute trades can be problematic in volatile markets
Funding Limitations
Unlike other brokers that offer direct deposit options into trading accounts, CommSec does not allow you to deposit cash funds directly into your CommSec account. Instead, all funds must flow through a linked settlement account (ideally a CDIA). This creates additional friction:
- Extra step in the funding process
- Potential delays in fund availability
- More complex account management
Increasing Your Trading Limit
Without a CDIA, your options for increasing your trading limit are limited. The primary methods involve:
- Opening a CDIA (CommSec’s preferred solution)
- Transferring additional shares into your CommSec-sponsored HIN
- Calling CommSec to request limit adjustments (subject to their discretion)
The Bottom Line
While CommSec offers a trusted platform with integration to Commonwealth Bank services, the trading limits for non-CDIA customers create meaningful restrictions for active investors. The requirement to place larger orders by phone with higher brokerage fees is particularly limiting when compared to other brokers offering more flexible online trading limits.
Before committing to CommSec, consider whether these limitations align with your investment strategy or if another broker might offer the flexibility you need without the additional costs and constraints.