The financing fee is charged when you use a Multiplier and keep the position open overnight.
You can always see the financing fee in the details screen of each product. This amount is charged daily between 00:00 and 01:15 GMT.
How is the financing fee calculated?
The financing fee is a % of the total trade value. Its calculation varies between products (Cryptos and non-Cryptos) and trade direction (long and short).
1. All products, except Cryptocurrencies
For all products except Cryptocurrencies, the financing fee is based on the relevant interbank rate (EONIA for European products, Federal Funds Rate for US products), which is added or subtracted to a fixed 3.5% annual spread.
On long positions, the following formula is applied: financing fee = (current total value of the trade) * (local interbank rate + 3.5%) * (1 / days per year)
On short positions, this formula is applied instead: financing fee = - (current total value of the trade) * (local interbank rate – 3.5%) * (1 / days per year)
We count 360 days per year for products denominated in EUR and USD, and 365 for products denominated in GBP.
As to Cryptocurrencies, we do not apply any financing fee on short positions.
On long positions, we apply a fixed rate: 20% per annum on Bitcoin and 25% per annum on other coins.
Therefore, the formulas to calculate financing fees on long positions over Crypto assets will be:
Bitcoin: financing fee = (current total value of the trade) * (20% / days per year)
Other coins: financing fee = (current total value of the trade) * (25% / days per year)
To give you an example:
Let’s say you invest £100 with a x5 Multiplier in a long position over a CFD on a European stock. As long as the position is open, each day following the trade, between 23:00 & 00:15, you will be charged a daily fee equal to the applicable daily rate multiplied by the total value of the trade, i.e.: £500. The applicable daily rate in turn will be equal to the sum of the EONIA rate of that day and the annual 3,5% spread, divided by 360. Assuming the Eonia rate of that day is -0,371%, the formula will look like this:
financing fee = (£500)*(-0,371 + 3.5%)* (1/360)
which means the daily financing fee you will pay will be equal to £0.05
Note: We do not apply financing fees on our Future products: US Oil, EU Oil, VIX.
Remember that if you are not using a Multiplier, you do not pay a financing fee.