CFD Interest

1. Interest on Open positions

If you hold a bought CFD position overnight you will pay interest on the open position at market value. This value is calculated daily and is based on the quantity of CFDs you hold multiplied by the closing market price for the underlying share on that day at the prevailing interest rate. For example (for a share CFD) if you were paying a bought CFD funding charge of 3% over the LIBOR (London Interbank Offer Rate (which was say 5.25%), you would be paying a total funding rate of 8.25% per annum. If the contract was for 10,000 CFDs and the closing price was $2.00 per share, the open position value would be $20,000.00. The funding charge would be approximately $4.52* for every day the contract is maintained ($20,000 x 8.25%= $1,650 divided by 360) and would be debited from your account daily.

If you hold a sold CFD position overnight you will be paid interest on the open position at market value. This value is calculated daily and is based on the quantity of CFDs you hold multiplied by the closing market price for the underlying share on that day at the prevailing interest rate. For example (for a share CFD) if you were paying a sold CFD funding charge of 2.5% under the LIBID (London Interbank Bid Rate (which was say 5.00%), you would be receiving a total funding rate of 2.5% per annum. If the contract was for 10,000 CFDs and the closing price was $2.00 per share, the open position value would be $20,000.00. The funding receipt would be approximately $1.38* for every day the contract is maintained ($20,000 x 2.5%= $500 divided by 360) and would be credited to your account daily.

The LIBOR and LIBID rate is similar to the RBA borrowing and return rate in Australia. The European rates are applied as the provider of the platform is European based, the available rate are viewable on the trading platform and are updated daily. Also 360 days is used rather than 365 days in the calculations because this is based on European standards.

*The exact amount of interest paid/received will vary each day, depending upon such factors as the closing price of the underlying instruments or securities in your CFD portfolio, changes to the holdings within your CFD portfolio and/or changes to the prevailing interest rate that is applied.

2. Interest on Credit and Debit Balances (Funds Held)

Your net free credit balance is your cash balance, per currency, plus or minus all positions

mark to market, less any initial margin requirements for all open positions.

The interest rate paid on account balances of less than $15,000 is the LIBID rate less 3.75%, interest rate paid on account balances between $15,000-$100,000 is LIBID less 2.5% and the interest rate paid on account balances exceeding $100,000 is LIBID less 1.5%. Interest is calculated daily, but credited to your account monthly. The amount is equal to the amount of your net free credit balance (per currency) multiplied by the annual rate of interest for the number of days you are owed interest. This amount is then divided by 360 to get a daily amount.

For example assume that you have the following scenario:

Base Currency is in Australian Dollars and your account balance is AUD$20,000. You have one open position which requires an initial margin of AUD $5,000 and you have an unrealised loss of this open position equal to AUD $2,000 and the LIBOR Rate = 5.5%. This means that your net free balance = $13,000 (i.e. $20,000 - $5,000 - $2,000) and the interest = (net free credit balance x interest rate x number of days interest owed)/360 = ($13,000 * 0.0175 * 1)/360 = $0.63 interest earned per day.

In the event your account balance becomes a debit (ie margin call) you will be charged interest daily at 3% above the LIBOR rate (say 5.25%), which would be at 8.25%  per annum.