DFBs, which do not have a daily rollover, have an interest adjustment applied daily to their account. Interest adjustments in respect of long positions is debited from a client's account and interest in respect of short positions is either credited or debited from a client's account.
The interest adjustment on a DFB is derived from the current one-month interbank offered rate of the currency of the share in which you are dealing, adjusted for our funding.
For example, if you are taking a long DFB position on a UK-listed share priced in sterling, the interest adjustment is calculated by adding the latest one month London Interbank Offered Rate (LIBOR) to our funding adjustment, usually 2.5% per annum. So, if LIBOR is 1.5%, the total daily interest adjustment to a long position would be 0.011% (1.5% + 2.5% ÷ 365).
Conversely, if you are taking a short DFB position on a UK-listed share priced in sterling, the total interest adjustment is calculated by subtracting our funding adjustment, usually 2.5% per annum, from LIBOR. Unlike long positions, the total interest adjustment on short positions can result in either a higher or lower opening level. If LIBOR is greater than our funding adjustment, the opening level will be higher than the closing level. If LIBOR is less than our funding adjustment, the opening level will be lower than the closing level.
For example, if LIBOR is 4% (greater than our funding adjustment), the interest adjustment to a rolled DFB short position would be 0.004% (4% - 2.5% ÷ 365). If LIBOR is 1.5% (less than our funding adjustment fee), the daily interest adjustment to a rolled DFB short position would be -0.0027% (1.5% - 2.5% ÷ 365).
Note that when you are shorting a stock via a DFB spread bet, you will incur a borrow charge. The borrow charge will be accounted for in a daily cash adjustment applied to the 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 betting.
A dividend adjustment is applied when a share passes its ex-dividend date (including the ex-date of any special dividend) in the underlying stock market. In the case of long positions, the dividend adjustment is credited to the client's account. In the case of short positions, the dividend adjustment is debited from the client's account. In the case of UK shares, the dividend adjustment is equal to the amount of the net dividend. The dividend adjustment for shares in other markets varies depending on local tax arrangements; please ask our dealers for current details.
For all shares quarterly bets, unless expressly agreed otherwise with IG, positions will be rolled over to a later date by default. For most positions, a client can, before the position has been automatically closed, ask for the position not to be rolled over to a later date. Rolling over a position involves closing the old position and opening a new one. We normally attempt to contact a client shortly before a position is due to expire and offer the opportunity to roll the position over. However, we cannot undertake to do this in every case, and it remains the client's responsibility to communicate their roll preferences for any position(s) before expiry. Bets on share options cannot be rolled over.
When a quarterly shares bet is rolled over to the next quarter, the expiring bet is closed at the middle of the market price after the close of the relevant exchange, plus or minus half our normal spread as shown in the ‘our spreads explained’ tab. No IG or market spread is charged on the opening of the new bet.
If you have a stop or a limit order on a daily position when it is rolled over, we will, unless instructed otherwise, place the stop on the new bet at the same level as the stop on the expiring bet.
If you have stops or limits on a quarterly bet when it is rolled over, we will, unless otherwise instructed, place the stop or limit on the new bet at the same level, but adjusted for fair value. For example, if the price of the new contract is 20 points higher than the expiring contract, your stop or limit would be rolled forward at your existing level plus 20 points. This applies to both guaranteed and non-guaranteed stops and limits.