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

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.
 

Formula:

 Bet size x price × (3% admin fee +/- SONIA%) ÷ 365

Formula:

Number of contracts x value per contract x price x (3%* admin fee +/- SONIA%) ÷ 365 

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 £6 per point on the FTSE 100

The 10pm (UK time) price is 7720

The SONIA rate* is 0.48% 

Cost = £6 x 7720 x (3% + 0.48%) ÷ 365

=£46,320 x 2.98% ÷ 365 

= £3.78 overnight charge 

* We use the SONIA and the 365-day divisor since you’re trading the UK Index in GBP

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 (3% - 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 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.

Formula:

Bet size x price × (3% admin fee +/- relevant interest rate benchmark%) ÷ 365

Formula: 

Number of contracts x value per contract x price x (3% admin fee +/- relevant interest rate benchmark%) ÷ 365 

* 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 £12 per point on Adidas AG (German stock)

The closing price is 18915

The ESTR rate is -0.37%

As you are short there is a Borrow Premium 0.9% 

Cost = £12 x 18915 x (3% - (-0.37%)) ÷ 360

= £226,980 x 3.37% ÷ 360

= £21.79 funding charge 

Borrow premium = 18915 x 12 x 0.9% ÷ 360

=£5.67 

Total charge = £21.79 + £5.67 

= £27.46 overnight charge

Example:

You’re long 1500 contracts on Rio Tinto Ltd (Australian stock)

The contract value is AUD 1

The closing price is 83.90

The 1-month AUD LIBOR rate is 1.89% 

Cost = 1500 x 1 x 83.90 x (3% + 1.89%) ÷ 360

= £125,850 x 4.89%  ÷ 360

= AUD 17.15 overnight charge

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 3% per annum. 

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 3% ÷ 360
 

3. Adjustment

Bet size x (basis + IG charge)

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 3% ÷ 360

3. Adjustment

Bet size x (basis + IG charge)

Example:

You’re long £10 per point on Oil – US Crude

T2 – T1 = 31 days

P2 price is 4700

P3 price is 4770

Basis = (4770 – 4700) ÷ 31 = £2.258

IG charge = 4700 x 3% ÷ 365 = £0.386

Adjustment = £10 x (£2.258 + £0.386) = £26.44*

Example:

You’re short one  £10 contract on Oil – US Crude

T2 – T1 = 31 days

P2 price is 4700

P3 price is 4770

Basis = (4770 – 4700) ÷ 31 = £2.258

IG charge = 4700 x 3% ÷ 365 = £0.386

Adjustment = £10 x (£2.258 - £0.386) = £18.72*

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.

Formula:

Long position:

Bet size x price x (IG fee + overnight funding rate)

 Short position:

Bet size x price x (IG fee - overnight funding rate)

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:

You are long £1 per point on bitcoin

The current price is 3500

Cost = (£1 x 3500) x (0.0277% + 0.0417%)

=£3500 x 0.0694% 

= £2.43 cost

Example:

You are short 20 lots of litecoin

The contract value is $1

The current price is 31.26 

Cost = (20 x $1 x 31.26) x (0.0208% – 0.0556%)

= $625.20 x -0.0348%

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 3% 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 3% ÷ 360/365 

3. Adjustment
Bet size x (basis + IG charge)

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 3% ÷ 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.

Example:

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 3% ÷ 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.

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 3% ÷ 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.3