Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.

Spread betting holding costs explained

At the end of each day (5pm, New York time), positions held in your account may be subject to a charge called a 'holding cost'. The holding cost can be positive or negative depending on the direction of your position and the applicable holding rate.

When spread betting​, historical holding rates, expressed as an annual percentage rate, are visible on our platform within the overview section for each product. See an overview of our trading fees​.

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Holding cost calculations

On a buy position (long):

Daily holding costs = (stake x point multiplier x current bet mid-price x annual holding rate buy) / 365

A point multiplier is the change in price that results in a profit or loss change equal to your stake size. This is shown as the last large digit in the price shown on the platform.

On a sell position (short):

Daily holding costs = (stake x –1 x point multiplier x current bet mid-price x annual holding rate sell) / 365

The current trade price uses the mid-price at 5pm (New York time) or the last CMC mid-price, if the market is already closed. For New Zealand shares, the closing mid-price of the previous day will be used.

The resulting sum of all holding costs will be credited to or debited from your account as applicable, and will be visible within your account history on the platform.

Shares

Overnight fees for spread bets on shares​ are based on the underlying interbank rate for the currency of the relevant share (see table below) plus 0.0082% on buy positions and minus 0.0082% on sell positions.

Holding costs are charged for buy positions and credited for sell positions, unless the underlying interbank rate is equal to or less than 0.0082%, in which case sell positions may incur a holding cost charge that will be deducted from the cash in your account. Holding rates for sell trades may also include an additional adjustment for borrowing fees on shares that attract a higher borrowing cost in the underlying market. These borrowing fees can be significant and are subject to large changes as short interest in a stock increases. Please be aware of this additional risk/charge when holding sell trades in individual shares.

Indices

Overnight holding rates for indices​ are based on the underlying interbank rate of the index (see table below) plus 0.0082% on buy positions and minus 0.0082% on sell positions.

Holding costs are charged for buy positions and credited for sell positions, unless the underlying interbank rate is equal to or less than 0.0082%, in which case sell positions may incur a holding cost charge.

Interbank rates for shares & cash indices

Currency Interbank rate
AUD One month bankers acceptance bill
CAD One month bankers acceptance bill
CHF One month Libor
DKK One month Copenhagen interbank offered rate
EUR One month Euribor
GBP One month Libor
HKD One month Hong Kong interbank offered rate
INR One month deposit
JPY One month Libor
NOK One month Norwegian interbank offered rate
NZD One month bank bill
SEK One month Stockholm interbank offered rate
SGD One month Singapore interbank offered rate
USD One month Libor
ZAR One month deposit

Foreign exchange

Overnight holding rates for FX​ are based on the tom-next (tomorrow to next day) rate in the underlying market for the currency pair and are expressed as an annual percentage.

Buy position holding rate = tom-next rate % + 0.0027%

Sell position holding rate = tom-next rate % - 0.0027%

Different rates are quoted for buy and sell positions and are actively traded between banks. Tom-next rates in the underlying market are based on the interest rate differential between the two currencies. As a general rule, if the interest rate of the first named currency is higher than the second named currency in the pair (subject to the adjustment detailed above), and you hold a buy position, the holding cost will be credited to your account. Conversely, if you hold a sell position in this scenario, the holding cost will be debited from your account.

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Commodities and treasuries

Holding rates for cash commodities and treasuries are based on the inferred holding costs built into the underlying futures contracts, from which the prices of our cash commodity and treasury products are derived. A cash price is a product without a fixed expiry or settlement date. The price of our cash commodity and treasury products strips out this inferred holding cost (as described above) to create our continuous 'cash' price. The inferred daily holding cost is then applied as our holding cost, which can be positive or negative.

Our cash commodities and treasuries provide clients with the convenience of being able to trade on a continuous price that, unlike forward commodities or treasuries, are not subject to an expiration date.

Using the underlying futures price data as a basis, our automated pricing engine calculates theoretical cash prices for each cash commodity and treasury by adding or subtracting (as applicable) the implied holding cost. Using these theoretical cash prices as a basis our automated pricing engine derives price depth ladders containing up to ten levels of depth for each cash commodity and treasury. Each level transparently displays the volume obtainable at a distinct price, with the volume and the applicable spread increasing as you go further down the ladder. Read more about ladder trading​.

The implied holding cost, plus or minus a haircut, is then applied daily to positions held at 5pm (New York time) as a daily holding cost amount.

The price of our cash product is based on the nearest most liquid futures contract, or primary contract, so over time as the underlying futures approach expiry the primary contract will change, which generally coincides with the roll dates of our forward instruments​.

Before each change in the primary contract the implied holding cost rate is calculated, and fixed, measuring the difference between the mid-price of the 'next' primary contract and the mid-price of our current cash price. Each time we update our primary contract the holding cost rate is recalculated to reflect this change.

In exceptional circumstances our cash price may not be based on the discounted price of the front month future but a further dated expiry due to conditions in the underlying market.

Calculation for the annual holding cost rate price for cash commodities and treasuries

  1. Subtract the mid-price of the current cash price from the mid-price of the next primary contract to get the price difference;
  2. Calculate the number of days to expiry between the next primary contract and now;
  3. Divide the price difference by the number of days to expiry and multiply by 365 to get the annualised difference in price terms;
  4. Divide the annualised price difference by the cash price to work out the percentage mid-rate, and;
  5. Bid or long position = (Percentage mid-rate + (maximum of (absolute of the percentage mid-rate x the haircut) or 3%)) x –1
  6. Ask or short position = (Percentage mid-rate – (maximum of (absolute of the percentage mid-rate x the haircut) or 3%)) x –1

Example (illustrative purposes only)

The UK Crude primary contract moved from June to July on 28 April at approximately 9.30pm (UK time).

  1. UK Crude July Future mid-price 47.48 – UK Crude Cash mid-price 47.79 = –0.31
  2. Expiry of July contract 30 May-28 April = 33 days
  3. –0.31 / 33 x 365 = –3.42879
  4. –3.42879 / 47.79 = –7.175%
  5. Bid or long position = (–7.175% + 3%) x –1 = 4.175%
  6. Ask or short position = (–7.175% - 3%) x –1 = 10.175%

Share baskets, forex & commodity indices

Holdings costs for share baskets, forex indices and commodity indices are calculated via a weighted sum of the constituents' holding cost rates, plus CMC's haircut on buy positions or minus CMC's haircut on sell positions.

Forward contracts

A forward contract is a product with a fixed expiration or settlement date, on which open positions will be settled at the closing price. Index, FX, commodity and treasury forward contracts are not subject to holding costs.

Learn more about spread betting with our spread betting articles and resources​.

FAQS

How long can you hold a spread bet?

You can hold spread bets from anywhere between a few seconds to several months. There is an overnight holding cost for buy and sell positions which can be positive or negative depending on the instrument, size and direction of the position. Learn more about spread betting.

What are overnight fees in trading?

Overnight fees in trading are the fees that you pay to cover any leveraged positions overnight, also referred to as holding costs. This daily fee will be charged to your account and applies to financial markets including forex, indices and shares. The amount, and whether the cost is positive or negative, will depend on the size and direction of your position. Read about our trading fees for more information.

Are holding costs the same for spread betting and CFD trading?

CFD costs are calculated in a slightly different way to spread betting holding costs, as they are represented by lots or units, rather than the spread. However, they differ according to the instruments you’re trading and the direction of the trade, like spread betting. Learn more about CFD costs.

How are holding costs calculated for forward contracts?

When spread betting ‘cash’ instruments, for example in the commodities market, holding rates are based on the costs of futures, or forward contracts. Our cash price doesn’t have a fixed expiry or settlement date, unlike forwards. Please see our Cost Disclosure for more information.

Is spread betting tax-free in the UK?

Our clients can spread bet tax-free in the UK, as well as being exempt from stamp duty and commission charges, which is a major advantage of spread betting over contracts for difference. However, tax treatment depends on individual circumstances and can change or may differ in a jurisdiction other than the UK. Read more about spread betting costs.

Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.