Why is overnight funding charged and how is it calculated?

For each day that a 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 currency of the underlying asset for CFDs.

Interest rate benchmark is calculated according to the currency of the underlying instrument.

For stock index contracts denominated in AUD and NZD, a daily interest adjustment is applied to positions opened before 4:50pm (Sydney time) that are still open after 4:50pm (Sydney time).

For stock index contracts denominated in non-AUD and non-NZD, a daily interest adjustment is applied to positions opened before 10:00pm London time that are still open after 10:00pm London time.

Please note that on Fridays, three days’ worth of funding adjustments are applied to open positions to cover the weekend.

Please also note that we price our Volatility Index (VIX) and EU volatility Index contracts in a different way to the rest of our cash index markets. Please refer to the 'other markets' section further below.

Formula:

* 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.

Example:

You’re short two contracts on the US Tech 100
The contract value is $100
The 10pm (UK time) price is 6957
The SOFR rate* is 1.53%

Cost = 2 x $100 x 6957 x (2.5% - 1.53%) ÷ 360
= $1,391,400 x 0.97% ÷ 360

= $37.49 overnight charge

*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 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 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 trading.

For US shares, on Monday to Thursday, a daily interest adjustment is applied to positions opened before 8:00pm New York time that are still open after 8:00pm New York time.

On Fridays we switch to London time, which is where our head office is located. This means, on Fridays, for positions opened on US shares before 10:00pm London time and still open after 10:00pm London time, a daily adjustment fee is applied.

For non-US shares, a daily interest adjustment is applied to positions opened before 10:00pm London time that are still open after 10:00pm London time, Monday to Friday.

Please note that on Fridays, three days’ worth of funding adjustments are applied to open positions to cover the weekend.

Formula:

* 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.

Example:

You’re long 1500 contracts on Commonwealth Bank of Australia
The contract value is AUD 1
The closing price is 83.90
The 1-month AUD BBWS rate is 1.89%

Cost = 1500 x 1 x 83.90 x (2.5% + 1.89%) ÷ 360

= A$125,850 x 4.39% ÷ 360

= A$15.35 overnight charge

For forex and spot metals deals, we charge the tom-next rate plus an admin fee of 1%.

What is the tom-next rate? Find out more here.

Please note that forex positions held through Wednesday 10pm (UK time) will incur three days’ worth of funding to cover the settlement of trades over the weekend. This is because FX settles on a T+2 basis. Therefore, when a position is held through Wednesday 10pm (UK time) it’s effectively being held through the weekend as positions can’t be settled until after Friday 10 pm (UK time). Subsequently, holding through Friday will only incur one day’s worth of funding.

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).

Prices for commodity 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.

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.

Formula:

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% ÷ 365

3. Adjustment

(Number of contracts x value per contract) x (basis + IG charge)

Example:

You’re short one A$10 contract on Oil – US Crude
T2 – T1 = 31 days
P2 price is 4700
P3 price is 4770

Basis = (4770 – 4700) ÷ 31 = A$2.258
IG charge = 4700 x 2.5% ÷ 365 = A$0.322

Adjustment = (1xA$10) x (A$2.258 - A$0.322) = A$19.36*

_{*A$19.36 will be credited to your account as you were short, and the next future contract was higher than the front contract.}

If you are long, for Bitcoin you will pay a daily overnight funding charge of 0.0694% (25% per Annum) for positions held at 10pm UK time. For Ether/Bitcoin, and Bitcoin Cash/Bitcoin and Crypto 10 you will pay 0.0625% (22.5% per annum). For all other cryptocurrency positions you will pay 0.0764% (27.5% per-annum).
If you are short, for Bitcoin you will receive a daily overnight funding charge of 0.0139% (5% per Annum) for positions held at 10pm UK time. For Ether/Bitcoin and Bitcoin Cash Bitcoin you will pay 0.0208% (7.5% per annum). For Crypto 10 you will receive 0.0208% (7.5% per annum) and for all other cryptocurrencies you will receive 0.0347% (12.5% per-annum).

Formula:

Long position:
Number of contracts x value per contract x price x (IG fee + overnight funding rate)

Short position:
Number of contracts x value per contract x price x (IG fee - overnight funding rate)

Example:

Overnight funding for long bitcoin position
Long 1 contract on Bitcoin , which is currently trading at a price of 30,000.
( 1 x 30,000 ) x 0.0694% = $20.82
Client will be charged $20.82 funding per day.

Overnight funding for short bitcoin position
Short 1 contract on Bitcoin, which is currently trading at a price of 30,000.
( 1 x 30,000 ) x 0.0139% = $4.17
Client will receive $4.17 funding per day.

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 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.

Formula:

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

(Number of contracts x value per contract) x (basis + IG charge)

Example:

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.}