Spread Bet Overnight Charges

Spread Bet Overnight Charges

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What is overnight funding, how is it charged and how is it calculated?

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

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If you hold a short-term trade and want to keep it open overnight, you’ll be charged a daily interest fee.
This charge will be applied to Daily Funded Bets (DFBs) as well as cash CFD positions held through 10pm (UK time).
Futures and forwards don’t incur overnight funding charges, but they do have wider spreads. These contracts are typically used for longer-term trades.
When placing a spread bet or CFD, you’re using leverage. This means you are effectively being lent the money required to open your position, outside the initial deposit you’ve paid. To keep your position open after 10pm (UK time), an interest adjustment will be made to your account to reflect the cost of funding your position overnight.
Overnight funding charges appear as separate transactions on your account and won’t affect your running profit/loss. A statement which contains all deals and associated charges is automatically sent to your registered email address at the end of each day.
For each day that a DFB or cash CFD position is open on a stock index, adjustments are calculated to reflect the effect of interest and dividends (if applicable).
Cost currency is determined by the DFB currency for spread bets and the currency of the underlying asset for CFDs.
Interest rate benchmark is calculated according to the currency of the underlying instrument.
Bet size x price × (SONIA%* +/- 2.5% admin fee) ÷ 365
Number of contracts x value per contract x price x ( SONIA% +/- 2.5% admin fee ) ÷ 365
* Mini contracts incur a 3% admin fee
* Price = price at 10pm (UK time) + if long - if short
365-day divisor used for the FTSE 100 and other GBP, SGD and ZAR denominated markets.
360-day divisor used for all other markets.
You’re long £6 per point on the FTSE 100
Cost = £6 x 7720 x (2.5% + 0.48%) ÷ 365
* We use the SONIA and the 365-day divisor since you’re trading the UK Index in GBP
You’re short two contracts on the US Tech 100
Cost = 2 x $100 x 6957 x (2.5% - 1.53%) ÷ 360
* We use the SOFR rate and the 360-day divisor since you’re trading the US Index in USD
Cost currency is determined by the DFB currency for spread bets and the currency of the underlying asset for CFDs.
Interest rate benchmark is calculated according to the currency of the underlying instrument.
Borrow charge: When you are shorting a stock via a DFB spread bet or cash CFD, you will incur a borrow charge. The borrow charge will be accounted for in a daily cash adjustment applied to your account. The charge varies according to the stock, is notified to us by our brokers or agents and includes a 0.5% administration fee. The borrow charge, and the ability to hold a short position, can be changed at short notice. To determine whether a borrow charge applies and if so, what the charge is, call our dealers in advance of betting/trading.
Please note that open positions held through 10pm (UK time) on Fridays will be adjusted for three days’ worth of funding to cover the weekend.
Bet size x price × (relevant interest rate benchmark%* +/- 2.5% admin fee) ÷ 365
Number of contracts x value per contract x price x (relevant interest rate benchmark%* +/- 2.5% admin fee) ÷ 365
* Mini contracts charged 3% admin fee
* Price = price at 10pm (UK time) + if long - if short
365-day divisor used for the FTSE 100 and other GBP, SGD and ZAR denominated markets.
360-day divisor used for all other markets.
You’re short £12 per point on Adidas AG (German stock)
As you are short there is a Borrow Premium 0.9%
Cost = £12 x 18915 x (2.5% - (-0.37%)) ÷ 360
Borrow premium = 18915 x 12 x 0.9% ÷ 360
You’re long 1500 contracts on Rio Tinto Ltd (Australian stock)
The 1-month AUD LIBOR rate is 1.89%
Cost = 1500 x 1 x 83.90 x (2.5% + 1.89%) ÷ 360
For forex and spot metals deals, we charge the tom-next rate plus an admin fee of 0.8%.
What is the tom-next rate? Find out more here .
The easiest way to work out overnight funding costs on FX pairs is to look up the swap rate on our platform (click here to find out how to do this) and to use the formulas below:
You’re short £3 per point on GBP/USD
Number of contracts x value of contract x offer swap rate
Number of contracts x value of contract x bid swap rate
You’re long one EUR/USD $10 contract
There are three steps to this formula:
There are three steps to this formula:
Price in points x 0.3% (0.8% for mini contracts) ÷ 360
Number of contracts x value of contract x swap rate
You’re long £3 per point on EUR/USD
The tom-next rate is 0.34 bid/0.39 offer
Value = 10650 x 0.8% ÷ 360 = 0.23666
Swap rate = 0.39 + 0.23666 = 0.62 (rounded)
* This is a debit since the offer interest rate is higher than the bid rate and you are holding a long position.
You’re short one EUR/USD standard lot
The tom-next rate is 0.34 bid/0.39 offer
Value = 10650 x 0.3% ÷ 360 = 0.08875
Swap rate = 0.34 – 0.08875 = 0.25 (rounded)
Cost = 1 x $10 x 0.25 = $2.50 credit*
Prices for commodity DFBs and cash CFDs are synthetically created using the two most liquid futures contracts. This will result in a natural movement between these two contract prices and will be included in overnight funding adjustments. You’ll then either be debited or credited depending if you’re long or short, and whether the next future contract price is higher or lower.
To find out more on how we price our commodities, please click here .
Commodity funding is based on the market cost of carry, plus an admin fee of 2.5% per annum.
There are three steps to this formula:
T1 = expiry date of the previous front future
T2 = expiry date of the front future
There are three steps to this formula:
T1 = expiry date of the previous front future
T2 = expiry date of the front future
You’re long £10 per point on Oil – US Crude
Basis = (4770 – 4700) ÷ 31 = £2.258
IG charge = 4700 x 2.5% ÷ 365 = £0.322
Adjustment = £10 x (£2.258 + £0.322) = £25.80*
You’re short one $10 contract on Oil – US Crude
Basis = (4770 – 4700) ÷ 31 = £2.258
IG charge = 4700 x 2.5% ÷ 365 = £0.322
Adjustment = £10 x (£2.258 - £0.322) = £19.36*
Cryptocurrency trading is only available to professional traders. Find out more about our professional account .
For bitcoin and Crypto10, the overnight funding rate is 0.0417% (15% per annum). For Ether / Bitcoin Cash and Bitcoin Cash / Bitcoin, the overnight funding rate is 0.0208% (7.5% per annum) and for all other cryptocurrencies it is 0.0556*%* (20% per annum). Holders of long positions will have the applicable rate debited, while holders of short positions will receive a credit of the applicable rate. Additionally, we charge an admin fee of 0.02778*%* (10% per annum) for Bitcoin, 0.04167*%* (15% per annum) for Ether / Bitcoin Cash and Bitcoin Cash / Bitcoin and 0.0208*%* (7.5% per annum) for all other cryptocurrencies and the Crypto 10 index. This is payable by both long and short position holders.
Bet size x price x (IG fee + overnight funding rate)
Bet size x price x (IG fee - overnight funding rate)
Number of contracts x value per contract x price x (IG fee + overnight funding rate)
Number of contracts x value per contract x price x (IG fee - overnight funding rate)
You are long £1 per point on bitcoin
Cost = (£1 x 3500) x (0.0277% + 0.0417%)
Cost = (20 x $1 x 31.26) x (0.0208% – 0.0556%)
Overnight funding for the following instruments is calculated in the same way as for commodities without fixed expiries:
EU Volatility Index, French OAT, German Bobl/Bund/Buxl/Schatz, Italian BTP, Japanese Government Bond, UK Long Gilt, US 2-Year/5-Year/10-Year T-Note, US Dollar Basket, US Treasury Bond, US Ultra Treasury Bond, Volatility Index.
Prices on these markets for DFBs and cash CFDs are synthetically created using the two most liquid futures contracts. This will result in a natural movement between these two contract prices and will be included in overnight funding adjustments. You’ll then either be debited or credited depending if you’re long or short, and whether the next future contract price is higher or lower.
Funding is based on the market cost of carry, plus an admin fee of 2.5% per annum.
Please note that open positions held through 10pm (UK time) on Fridays will be adjusted for three days’ worth of funding to cover the weekend.
There are three steps to this formula:
1. Basis (the daily movement along the futures curve) (P3 – P2) ÷ (T2 – T1) T1 = expiry date of the previous front future T2 = expiry date of the front future P2 = price of front future P3 = price of next future
2. IG charge Price x 2.5% ÷ 360/365
3. Adjustment Bet size x (basis + IG charge)
There are three steps to this formula:
1. Basis (the daily movement along the futures curve) (P3 – P2) ÷ (T2 – T1) T1 = expiry date of the previous front future T2 = expiry date of the front future P2 = price of front future P3 = price of next future
2. IG charge Price x 2.5% ÷ 360/365
3. Adjustment Bet size x (basis + IG charge)
365-day divisor used for the FTSE 100 and other GBP, SGD and ZAR denominated markets. This divisor will also be applied to all commodities denominated in CNH.
360-day divisor used for all other markets.
You’re long £100 per point on the Volatility Index
T2 - T1 = 31 days P2 price is 15.50 P3 price is 16.50 Basis = (16.50 - 15.50) ÷ 31 = £0.03 IG charge = 15.50 x 2.5% ÷ 365= £0.001
Adjustment = £100 x (£0.03 + £0.001) = £3.1*
*The £3.1 adjustment would be offset in the running profit or loss on this position.
You’re short 100 contracts on the Volatility Index
The contract value is £100 T2 - T1 = 31 days P2 price is 15.50 P3 price is 16.50 Basis = (16.50 - 15.50) ÷ 31 = £0.03 IG charge = 15.50 x 2.5% ÷ 365 = £0.001
Adjustment = £100 x (£0.03 - £0.001) = £2.9*
*£2.9 will be credited to your account as you were short, and the next future contract was higher than the front contract.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Professional clients can lose more than they deposit. All trading involves risk.
The value of shares, ETFs and ETCs bought through a share dealing account, a stocks and shares ISA or a SIPP can fall as well as rise, which could mean getting back less than you originally put in. Past performance is no guarantee of future results.
What is the base calculation for FX funding?

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Spread betting - overnight charges?

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Joined 07/09/22 15:43

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By

boomertrade , December 23, 2020 in New to IG Community

I have been an equities investor for years and usually just buy and hold. I am testing out the spread betting platform but cannot for the life of me find a definitive answer to what I am charged to overnight a DFB...

I opened a tiny position yesterday (22nd December) and appear to have been charged an INT fee today (interest I am guessing) but I was looking for some sort of overnight fee which I can't find (is it the INT fee)?

Thanks JLZ - should have been able to find that myself!

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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Professional clients can lose more than they deposit. All trading involves risk.
The value of shares, ETFs and ETCs bought through a share dealing account, a stocks and shares ISA or a SIPP can fall as well as rise, which could mean getting back less than you originally put in. Past performance is no guarantee of future results.
CFD, share dealing and stocks and shares ISA accounts provided by IG Markets Ltd, spread betting provided by IG Index Ltd. IG is a trading name of IG Markets Ltd (a company registered in England and Wales under number 04008957) and IG Index Ltd (a company registered in England and Wales under number 01190902). Registered address at Cannon Bridge House, 25 Dowgate Hill, London EC4R 2YA. Both IG Markets Ltd (Register number 195355) and IG Index Ltd (Register number 114059) are authorised and regulated by the Financial Conduct Authority.
The information on this site is not directed at residents of the United States, Belgium or any particular country outside the UK and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

Overnight Financing Explained: What is it and is it important?

Trading / By
Richard Berry

/ 23rd August 2022 25th August 2022
Richard founded the Good Money Guide (previously Good Broker Guide) in 2015 and has been a broker for 20 years
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