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Trading Cost
Our charges and adjustments
Being a successful trader means understanding what charges and adjustments you may come across. Being a good trading provider is being clear and transparent about them.
Here we break down the different concepts involved and the reasoning behind them.
Direct charges
Spreads
Every market has two prices – the buy and the sell price, the spread is the difference between the buy and sell price.
In the same way a high-street retailer adds a little extra to the price when it buys stock from a wholesaler, the spread is how most trading providers compensate themselves for the service they provide.
Variable spreads
Variable spreads may fluctuate throughout the day. With variable spreads, we will quote you the minimum spread it could be, plus an average spread for a defined historical period of time.
Commission (Share CFDs)
Shares are the only asset class where you will have to pay a commission – a small one-off fee for opening the trade.
Shares CFD commissions vary by market, for UK and most European equities the charge is 0.08% of the consideration, for most US Shares it is 1.8 cents per share and for Asian Shares it starts at 0.08%. Our minimum commission rates are £10, $10, €10 or 10SGD.
Details on the commission rates for each share CFD can be found within the Market Information sheets on the platforms.
Potential further adjustments
Rollovers and financing adjustments
When you hold a position overnight, you either pay or receive a rollover fee (also known as a financing charge). These fees fluctuate daily and are different for long and short positions.
Rollovers are only applied to positions that are open at market close in New York – 5pm ET.
A rollover fee is calculated using a swap rate. The swap adjustment is simply the accounting of the cost-of-carry on a day-to-day basis (we do not charge rollover on intraday trades).
The swap rate is measured by the difference in interest rates between the two currencies. We source the swap rate from major financial institutions which base it on a variety of factors such as inflation and key technical indicators.
The rollover rates as calculated as follows:
- Long positions – you are credited/debited by –1 x the trade size x swap points in the unit quote currency
- Short positions – you are debited/credited by the trade size x swap points in the unit quote currency
Example
The swap rates for EUR/USD are 0.817/1.28 and you have a long position of €10,000.
If you held the position overnight, you would be charged a $1.28 rollover fee.
If you had a short position, then you would receive $0.82.
The amounts are then converted back into your base currency.
How are finance rates calculated?
Financing charges for positions which remain open at our market close are calculated using the following formula:
Short Positions F = V × I / b
Long Positions F = V × I / b, where:
- F = Daily Financing Fee
- V = value of equivalent (quantity x end of day closing price)
- I = applicable Financing Rate
- b = day basis for currency (365 for GBP, HKD and AUD, 360 for all other currencies)
The daily financing fee will be applied to your account each day that you hold an open position (including weekend days). The financing rates are set at benchmark regional interest rate +/- 2.5%.
For example, you are long €10 on the UK 100 and hold the position overnight. UK 100 closes at 6500.
The LIBOR rate for that day is 0.33
F = V x I/b
V = 10 (quantity) x 6500 (end of day closing price ) = 65000
I = 0.33 + 2.5% = 2.88%
V x I = 65000 x 2.88% = 1872
F = 1872 / 365 = €5.12 (Financing paid by you per day)
Financing on hedged trades
If you have a hedged position open overnight, you will be charged overnight financing on both sides of the trade.
Dividend adjustments
When trading our share CFDs, you do not receive any dividends because you do not own the actual stock. Instead, what occurs is a dividend adjustment.
This is because when a company pays out its dividends on the ex-date, the share price takes a slight dip; money has flowed out of the company and into the pockets of the shareholders.
At todaymarkets.com, we balance the positive effect of the dividend against this dip in the share price.
What happens is that a dividend adjustment occurs at the close of business before the ex-dividend date:
- Long positions are credited
- Short positions are debited
Then all things being equal, the market then opens lower on the ex-date by the dividend amount.
Therefore, the dividend has not impacted your trade or any profit/loss you may have made.
Inactivity fees
We charge an inactivity fee of €15 (or currency equivalent) per month if there is no trading activity or no open positions for a period of 12 months or more.
Clients that hold non GBP accounts will be charged as follows:
‘Activity’ is defined as placing a trade and/or maintaining an open position during this period. Placing an order on an account without executing a trade will not qualify as activity for these purposes.
If your account has been inactive for 3+ years (retail clients) or 1+ years (professional clients) we’ll need to reassess your trading experience and ensure that we have your up-to-date contact details.
You will need to complete our account reactivation form and a member of our Client Management Team will be in touch to let you know if we need anything further from you or to let you know that your account(s) have been reactivated.
Commodity basis adjustment
When trading spot commodity markets, there will be an adjustment to the market price every day. Your account will then be adjusted in the form of a credit or debit to offset the price adjustment.
To price these non-expiring markets, we use two sufficiently liquid futures contracts on the underlying commodity. This is usually the two with the nearest expiry date.
The contract with the closest expiry date is called the ‘front month’ contract and the second-nearest expiry date is called the ‘far month’ contract.
Throughout the duration of the front month contract, the price of the spot commodity market will gradually move from the price of the front month to the price of the far month.
For example, if the front month is market ‘A’ and the far month is market ‘B’ the following would be true.
The market prices move from the price of market ‘A’ towards the price of market ‘B’ as the expiry date of ‘A’ becomes closer. The price of market ‘B’ may be higher or lower, depending on the commodity, than that of market ‘A’.
Daily adjustments for spot commodity markets reflect a day’s movement from ‘A’ towards ‘B’.
For example, if the spot commodity contract is adjusted by +2 points, clients with long positions will be debited 2 x stake and clients with short positions will be credited 2 x stake.
We may use further months should the near, far or both months, become unsuitable to trade.
Negative balance protection
For retail clients only, our negative balance protection means that your account is protected should your account balance fall below zero.
If you do find that your account falls below zero we will adjust the account back to zero as soon as possible.
Margin Close out / liquidation
If your margin level is at or below the margin close out (MCO) level, we are required to close any or all of your open positions as quickly as possible; this is to protect you from possibly incurring further losses.
We strongly recommend that you monitor your margin level carefully, as you should not expect to receive a margin call or warning prior to closure. The Margin Level Indicator on the trading platform makes monitoring your margin level simple.
The calculation for the margin level indicator is determined by the Net Equity in your account divided by your Total Margin Requirement, multiplied by 100.
To improve your margin indicator do one or more of the following:
- Deposit funds
- Close or part close positions
- Add an order-aware stop loss (Professional clients only)
Please be aware that during times of high volatility market prices can gap and this may affect the prices at which your positions are closed out.
Costs and charges FAQs
What is the back to base currency conversion charge?
Back to Base automatically converts any realised profits and losses, adjustments, fees and charges that are denominated in another currency, back to the base currency of your account before applying them to your account.
When Back to Base charges are applied, we strive to use commercially reasonable rates (which may be up to and including +/- 0.5% away from our quoted prices or rates from time to time). Any conversions and the rates applied will be disclosed on your contract notes and statements.
What is a financing fee?
Financing, also known as rollovers, is a charge that you pay in order to hold a position open overnight. The daily financing fee is automatically applied to your account each day that you hold an open position (including weekends). Should you hold a position overnight, there will be an overnight financing adjustment. We use swap points to calculate the daily overnight financing adjustment amount for FX pairs.
