Beginner
How to trade
3 minute read
Overnight financing explained
What is overnight financing?
Financing is a fee that you pay in order to hold a position open overnight (excluding futures contracts). The daily financing fee will be applied to your account each day that you hold an open position (including weekend days). There is no financing charged on futures contracts. Our financing rates are set at 2.5% +/- the benchmark regional interest rate . The financing rates we charge by territory are:
Country | Financing on long positions | Financing on short positions |
|---|---|---|
UK | 2.5% + SONIA | 2.5% - SONIA |
US | 2.5% + SOFR | 2.5% - SOFR |
EU | 2.5% + €STR | 2.5% - €STR |
Singapore | 2.5% + SORA | 2.5% - SORA |
Other international | Contact Client Management | Contact Client Management |
How are finance rates calculated?
Financing charges for positions which remain open at our market close are calculated using the following formula:
Short Positions F = V × I / b
Long Positions F = V × I / b, where:
- F = Daily Financing Fee
- V = value of equivalent (quantity x end of day closing price)
- I = applicable Financing Rate
- b = day basis for currency (365 for GBP, HKD and AUD, 360 for all other currencies)
The daily financing fee will be applied to your account each day that you hold an open position (including weekend days). The financing rates are set at benchmark regional interest rate +/- 2.5%.
For example, say you are long £10 on the UK 100 and hold the position overnight. The UK 100 closes at 7000, and the SONIA rate for that day is 0.33.
F = V x I/b
V = £10 (quantity) x 7,000 (end of day closing price ) = 70,000
I = 0.33% + 2.5% = 2.83%
V x I = £70,000 x 2.83% = £1,98
F = £1,981 / 365 = £5.43 (overnight financing paid by you per day)
Financing on hedged trades
If you have a hedged position open overnight, you will be charged overnight financing on both sides of the trade.
When does the charge apply?
The daily financing fee will be applied to your account each day that you hold an open position (including over the weekend).
You will not pay a finance charge on futures trades as they already have the cost of carry built into the spread.
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