Rolling Daily Spread Betting Charges
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Rolling Daily Bets may incur a charge or income for each day that they are held overnight.
If you are long of an equity or index, this equates to real market cash exposure and so interest may be charged on this cash value for each day that the position is held open overnight.
If you are short of an equity or index, an interest return may be paid on these equivalent cash funds.
The overnight financing can be calculated as follows:
F = (p / u) x s x i
b
F = overnight financing
p = closing price
u = bet unit risk
s = stake
i = applicable interest rate (RFR + 2% for long bets or – 2% for short bets)
b = day basis (365)
Notes on Daily Rolling Share and Index Bets
- The Relevant Funding Rate (RFR) is generally equivalent to the base rate of the underlying currency of the country of the market concerned.
Long rolling bets on shares / indices may be debited financing (RFR plus 2%).
Short rolling bets on shares / indices may be credited financing (RFR minus 2%).
For example, the RFR for a short rolling daily bet on Google would be based upon the base rate (Fed Funds Rate) of the USA minus 2% (e.g. 3.25% - 2% = 1.25%).
- The bet unit risk is the smallest movement on the relevant contract that equates to a profit (loss) change that is the same as your stake.
- Dividend adjustments are credited to long positions and debited from short positions held at the close of business on the day before the ex-dividend date.
If you are long, you may receive 80% of the dividend and if you are short you may be debited 100% of the dividend.
Payment is credited / debited to your account on the ex-dividend date.
Dividend adjustments may also apply to index bets.
Notes on Daily Rolling Currency Bets
- The Relevant Funding Rate (RFR) for Forex bets is generally equivalent to the base rate of the second currency minus the base rate of the first currency in a currency pair.
For example, the first currency in the currency pair GBP/USD is sterling and the second is the US dollar.
Therefore, the corresponding RFR for GBP/USD may be calculated as follows: 3.25% (USD) minus 4.50% (GBP) = a negative interest rate of minus 1.25% or – 0.0125%.
- For Daily Rolling currency bets, the difference between the interest rates of currencies may be a negative number.
Note: The rates used for the examples above are indicative and are not necessarily representative of correct rates. Content care of Financial Spreads, last updated, Monday 15th October 2009.
"Rolling Daily Spread Betting Charges" last update by R Thomas, 24-Aug-2011
Warning: Financial spread betting carries a high level of risk. You can lose more than your initial investment or stake. Financial spread betting may not be suitable for all investors. Only trade with money that you can afford to lose. Make sure you fully understand the risk involved. If necessary, seek independent financial advice.
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