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 trade and the applicable holding rate.
Historical holding rates, expressed as an annual percentage rate, are visible on our platform within the overview section for each product. Holding costs are calculated as follows:
On a buy position:
(Units x current mid-price x holding rate buy) / 365 x CMC Markets currency conversion rate.
On a sell position:
(Units x -1 x current mid-price x holding rate sell) / 365 x CMC Markets currency conversion rate.
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.
Holding rates for share CFDs 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.
Holding rates for index CFDs 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.
|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 one|
|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|
Holding rates for FX CFDs 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 % + 1%
Sell position holding rate = tom-next rate % - 1%
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 1% 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.
Holding rates for cash commodity and treasury CFDs 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 enable you to trade on a continuous price which, unlike forward commodities or treasuries, is 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 applicable spread increasing as you go further down the ladder.
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.
The haircut used to generate the price for cash commodities and treasuries is the mid-rate +/– 2.5%.
The Crude Oil Brent primary contract moved from June to July on 28 April at approximately 9.30pm (UK time).
A forward contract is a product with a fixed expiration or settlement date, upon which open positions will be settled at the closing price.
Index, FX, commodity and treasury forward contracts are not subject to holding costs.
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