Why is overnight funding charged and how is it calculated?

For each day that a cash CFD position is open on a stock index, adjustments are calculated to reflect the effect of interest and dividends (if applicable).

Cost currency is determined by the currency of the underlying asset for CFDs.

Interest rate benchmark is calculated according to the currency of the underlying instrument.

IG publishes weekly interest rates used to calculate the overnight funding rates (per annum) for Indices. You can find them here.

Please note that open positions held through 2am (Dubai time) on Saturdays will be adjusted for three days' worth of funding to cover the weekend.*

Formula:

Number of contracts x value per contract x price x (2.5% admin fee +/- SONIA%) ÷ 365/360

Mini contracts incur a 3% admin fee

Price = price at 2am (Dubai time)* + if long - if short

365-day divisor used for the FTSE 100 and other GBP, SGD and ZAR denominated markets.

360-day divisor used for all other markets.

Example:

You're short two contracts on the US Tech 100

The contract value is $100

The 2am (Dubai time)* price is 6957

The SOFR rate** is 1.53%

Cost = 2 x $100 x 6957 x (3% - 1.53%) ÷ 360

= $1,391,400 x 1.47% ÷ 360

= $56.82 overnight charge

** We use the SOFR rate and the 360-day divisor since you're trading the US Index in USD

Cost currency is determined by the currency of the underlying asset for CFDs.

Interest rate benchmark is calculated according to the currency of the underlying instrument.

IG publishes weekly interest rates used to calculate the overnight funding rates (per annum) for Shares, and ETFs. You can find them here.

Borrow charge: When you are shorting a stock via cash CFD, you will incur a borrow charge. The borrow charge will be accounted for in a daily cash adjustment applied to your account. The charge varies according to the stock, is notified to us by our brokers or agents and includes a 0.5% administration fee. The borrow charge, and the ability to hold a short position, can be changed at short notice. To determine whether a borrow charge applies and if so, what the charge is, call our dealers in advance of trading.

Please note that open positions held through 2am (Dubai time) on Saturdays will be adjusted for three days' worth of funding to cover the weekend.*

Formula:

Number of contracts x value per contract x price x (2.5% admin fee +/- SONIA%) ÷ 365/360

Mini contracts charged 3% admin fee

Price = price at 2am (Dubai time)* + if long - if short

365-day divisor used for the FTSE 100 and other GBP, SGD and ZAR denominated markets.

360-day divisor used for all other markets.

Example:

You're long 1500 contracts on Rio Tinto Ltd (Australian stock)

The contract value is AUD 1

The closing price is 83.90

The 1-month AUD LIBOR rate is 1.89%

Cost = 1500 x 1 x 83.90 x (2.5% + 1.89%) ÷ 360

= £125,850 x 4.39%

= AUD 15.35 overnight charge

For forex and spot metals deals, we charge the tom-next rate plus an admin fee of 0.8%.

What is the tom-next rate? Find out more here.

Please note that forex positions held through Thursday 2am (Dubai time) will incur three days' worth of funding to cover the settlement of trades over the weekend (Saturday/Sunday). This is because FX settles on a T+2 basis. Therefore, when a position is held through Thursday 2am (Dubai time) it's effectively being held through the weekend (Saturday/Sunday) as positions can't be settled until after Saturday 2am (Dubai time). Subsequently, holding through Friday will only incur one day's worth of funding.*

The easiest way to work out overnight funding costs on FX pairs is to look up the swap rate on our platform and to use the formulas below:

Formula:

Long:

Number of contracts x value of contract x offer swap rate

Short:

Number of contracts x value of contract x bid swap rate

Example:

You're long one EUR/USD $10 contract

The GBP/USD swap offer is -0.85

1 x $10 x -0.85 = $8.50 debit

What is the base calculation for FX funding?

Formula:

There are three steps to this formula:

Example:

You're short one EUR/USD standard lot

The contract value is $10

The tom-next rate is 0.34 bid/0.39 offer

The closing spot price is 1.0650

Value = 10650 x 0.3% ÷ 360 = 0.08875

Swap rate = 0.34 – 0.08875 = 0.25 (rounded)

Cost = 1 x $10 x 0.25 = $2.50 credit**

** This is a credit since the bid interest rate is lower than the offer rate and you are holding a short position.

Prices for commodity cash CFDs are synthetically created using the two most liquid futures contracts. This will result in a natural movement between these two contract prices and will be included in overnight funding adjustments. You'll then either be debited or credited depending if you're long or short, and whether the next future contract price is higher or lower.

To find out more on how we price our commodities, please click here.

Commodity funding is based on the market cost of carry, plus an admin fee of 3% per annum.

Please note that open positions held through 2am (Dubai time) on Saturdays will be adjusted for three days' worth of funding to cover the weekend.*

Formula:

There are three steps to this formula:

Example:

You're short one $10 contract on Oil – US Crude

T2 – T1 = 31 days

P2 price is 4700

P3 price is 4770

Basis = (4770 – 4700) ÷ 31 = £2.258

IG charge = 4700 x 3% ÷ 365 = £0.386

Adjustment = £10 x (£2.258 - £0.386) = £18.72**

** £18.72 will be credited to your account as you were short, and the next future contract was higher than the front contract.

** £19.36 will be credited to your account as you were short, and the next future contract was higher than the front contract.

For bitcoin, the overnight funding rate is 0.0417% (15% per annum). For all other cryptocurrencies it is 0.0556% (20% per annum). Holders of long positions will have the applicable rate debited, while holders of short positions will receive a credit of the applicable rate. Additionally, we charge an admin fee of 0.02778% (10% per annum) for Bitcoin, and 0.0208% (7.5% per annum) for all other cryptocurrencies. This is payable by both long and short position holders.

Formula:

Long position:

Number of contracts x value per contract x price x (IG fee + overnight funding rate)

Short position:

Number of contracts x value per contract x price x (IG fee - overnight funding rate)

Example:

You are short 20 lots of litecoin

The contract value is $1

The current price is 31.26

Cost = (20 x $1 x 31.26) x (0.0208% – 0.0556%)

= $625.20 x -0.0348%

= $0.2175 debit

Overnight funding for the following instruments is calculated in the same way as for commodities without fixed expiries:

EU Volatility Index, French OAT, German Bobl/Bund/Buxl/Schatz, Italian BTP, Japanese Government Bond, UK Long Gilt, US 2-Year/5-Year/10-Year T-Note, US Dollar Basket, US Treasury Bond, US Ultra Treasury Bond, Volatility Index.

Prices on these markets for cash CFDs are synthetically created using the two most liquid futures contracts. This will result in a natural movement between these two contract prices and will be included in overnight funding adjustments. You'll then either be debited or credited depending if you're long or short, and whether the next future contract price is higher or lower.

Funding is based on the market cost of carry, plus an admin fee of 3% per annum.

Please note that open positions held through 2am (Dubai time) on Saturdays will be adjusted for three days' worth of funding to cover the weekend.*

Formula:

There are three steps to this formula:

365-day divisor used for the FTSE 100 and other GBP, SGD and ZAR denominated markets. This divisor will also be applied to all commodities denominated in CNH.

360-day divisor used for all other markets.

Example:

You're short 100 contracts on the Volatility Index

The contract value is £100

T2 - T1 = 31 days

P2 price is 15.50

P3 price is 16.50

Basis = (16.50 - 15.50) ÷ 31 = £0.03

IG charge = 15.50 x 2.5% ÷ 365 = £0.001

Adjustment = £100 x (£0.03 - £0.001) = £2.9**

** £2.9 will be credited to your account as you were short, and the next future contract was higher than the front contract.