Financing is applicable to spot (cash) CFDs, such as gold and the UK 100, held overnight. CFD futures such as oil do not incur financing charges. Long CFD positions are typically charged interest, while short CFD positions may receive interest. The finance, or interest adjustment, is derived from the day-end value of a trade and the applicable interest rate of the currency of the product traded. The interest adjustment is converted, if needed, to the client account currency. Financing is charged or received daily, unless there is a holiday or a weekend. In such circumstances, weekend financing is applied for three days on the same day.
For most CFD equity indices, where settlement is T+3, the three day financing is applied on Tuesday. For other products, such as metals and certain equity indices, settlement is T+2 and the three day financing is applied on Wednesday.
Below is the financing schedule for each product.
|EU Stocks 50||1||3||1||1||1|
|US SPX 500||1||3||1||1||1|
|US Tech 100||1||3||1||1||1|
|Hong Kong 40||1||1||3||1||1|
Formula for Financing
Financing = C x P x (I +/- F) / Y x D
C = Number of CFDs
P= Our price at time of calculation
I = Relevant interest rate
F = Premium charged by WWM
Y = number of days used in calculation; typically 360 (but 365 for GBP and AUD instruments)
D = number of days to charge interest
On a Wednesday you place a buy trade of 15oz of Gold CFD.
At the time of financing charge, Gold is trading at 1135.5 / 1136.1, LIBOR is 1% and WWM premium is 3%.
As it is a Wednesday, 3 days financing applies
The debit = 15oz x 1135.5 x (1%+3%) / 360 x 3 = $5.68 charge, which is then posted to the account.
On a Monday you place a sell trade of 25oz of Gold CFD.
At the time of financing charge, Gold is trading at 1152.5 / 1153.1, LIBOR is 4% and WWM premium is 3%.
As it is a Monday, 1 days financing applies.
The credit = 25oz x 1153.1 x (4%-3%) / 360 x 1 = $0.80 credit, which is then posted to the account.
*Note that due to level of rates you may also pay financing,even when short.
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