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LIBOR definition
LIBOR has a particular significance in relation to IG's platform. Here, we define LIBOR in general investing and explain what it means to you when trading with IG.
LIBOR, or the London Interbank Offered Rate, is a benchmark that dictates daily interest rates on loans and financial instruments around the world.
To calculate LIBOR, the Intercontinental Exchange (ICE) asks banks around the world to provide the rates at which they would offer a short-term loan to each other. It then averages each response to give the daily LIBOR figure.
LIBOR is calculated in five different currencies – the US dollar, euro, British pound, Japanese yen and Swiss franc – and seven different lengths of loan. That means that there are actually 35 different LIBOR numbers posted each day.
Financial companies around the world then use the LIBOR figure to calculate their own interest rates on loans, mortgages, credit cards and financial derivative prices.
With IG
IG uses LIBOR to dictate daily funding costs for daily funded bets and cash CFDs. Charges are a certain percentage above or below the current LIBOR rate, depending on whether the position is long or short.
Visit our charges section
Find out more about our pricing policy and overnight funding charges here.
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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading spread bets and 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 bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.