Be informed - learn and understand the costs related to trading FX and CFD instruments with House of Borse
How is FX Commission calculated?
House of Borse charges commission per $100,000 of volume traded. Any amount greater than, or less than, this is charged pro-rata.
If the amount traded is a non-USD currency, then the volume is converted in to a USD equivalent volume at the spot rate at the time the trade is executed, and the commission is then applied to this volume.
Also, all commission for a position is charged at the opening of the trade.
Below are examples to illustrate how this works.
Example 1: Trading USD-based currency pair
A client goes long 1 lot of USDCAD. The client is a ‘Silver’ account holder, so is charged $4 per $100,000 per side.
Therefore, USD volume of 1 lot of USDCAD = $100,000
So, commission charged for this trade (open and close) = $4 x 2 (all commission charged and debited on the opening of the trade)
Total commission = $8
Example 2: Trading Non-USD-based currency pair
A client goes long 1 lot of EURUSD. The client is a ‘Silver’ account holder, so is charged $4 per $100,000 per side. The EURUSD exchange rate at the opening of the position is 1.1750.
Therefore, the USD equivalent volume of 1 lot of EURUSD = 100,000 x 1.175 = $117,500
So, the commission charged for this trade (open and close) = $4 x (117,500/ 100,000) x 2 = $4.70 x 2 (all commission debited on the opening of the trade)
Total commission = $9.40
Example 3: Trading an exotic currency pair
A client goes short 1 lot of GBPDKK. The client is a ‘Gold’ account holder, so is charged $3.50 per $100,000 per side. The GBPUSD exchange rate at the open of the position is 1.3200
Therefore, the USD equivalent volume of 1 lot of GBPDKK = 100,000 x 1.3200 = $132,000
So, commission charged on this trade (open and close) = $3.50 x (132,000/ 100,000) x 2 = $4.62 x 2
Total commission = $9.24
How is CFD Commission calculated?
The commission rates charged for CFDs and commodities can be seen on the CFD page of our website.
The full amount of commission for CFDs is debited on the opening of the trade. The commission is charged on a per lot basis. Any amount greater than, or less than, 1 lot is charged on a pro-rata basis.
Hedged positions are charged per leg, ie: the long and short positions are charged separately.
Example 1: Client is long 1 Lot of a CFD
A client has a USD denominated account and is a ‘Silver’ account holder. The client goes long 1 lot of UK 100 cash index. So the client is charged $0.5 per trade plus 0.5 ticks of the quoted price per lot traded. For UK 100, tick size =1 and tick value =$1. Therefore 0.5 ticks = $0.5.
Total Commission = $0.5 (comm)+ $0.5 (markup) = $1 per Lot per Round Turn (RT)
(all commission charged and debited on the opening of the trade)
Example 2: Client Short 3 lots of a Commodity
A client has a EUR denominated account and is a ‘Silver’ account holder. The commission is always charged in the denomination of the account. So this client will get charged commission in Euros. The client goes short 3 lots of US Oil Futures. The client is therefore charged the commission of EUR 0.9 per lot traded plus 0.01 ticks. For US oil futures, tick size = 0.01 and tick value = EUR 1
Therefore, commission on 3 lots of US Oil= 3 x EUR $0.9 = EUR 2.7 (all commission charged and debited on the opening of the trade) and the markup = EUR 1
Total Commission = EUR 2.7 (comm)+ $3 (markup) = EUR 5.7 per RT
Example 3: Client has a hedged position of 5 lots
A client has a USD denominated account and is a ‘Silver’ account holder. The client goes short 5 lots of US 30 Futures. The client also goes long 5 lots of US 30 Futures, so that the position is fully hedged. The client is charged commission of $0.9 plus 0.1 tick of the contract per lot traded.
For US 30 futures, tick size = 1 and tick value = $1. Therefore tick amount charged = 1 x 0.1 = $0.1
Commission for long position = (5 x $0.9) + (5 x $0.1) = $4.5 +$0.5 = $5
Commission for short position = (5 x $0.9) + (5 x $0.1) = $4.5 +$0.5 = $5
Total Commission = $10 (all commission charged and debited on the opening of the trade)
How is the Management fee calculated?
The management fee is a flat fee charged per lot of a currency pair that is open overnight.
The charge is applied each night the position is kept open and is applied pro-rata.
Long and short positions are charged separately, even if it is a hedged position.
On Wednesday’s the management fee is charged for 3 nights, to account for the weekend.
Our full range of management rates can be seen on our ‘Interest Free Account’ page.
Below are examples to illustrate how this works.
Example 1: Client long 1 lot
A client is long 1 lot of EURUSD. The management fee for EURUSD is currently $8.50
So, if the client held this position overnight from Monday in to Tuesday, then he would be charged $8.50
Example 2: Client long 0.5 lots
A client is long 1 lot of USDCHF. The management fee for USDCHF is currently $8.50.
So, if the client held this position overnight from Tuesday in to Wednesday, then:
Management Fee = 0.5 x $8.50 = $4.25
Example 3: Client long 1 lot on Wednesday Evening
A client is long 1 lot of GPNZD. The management fee for GBPNZD is currently $14.50.
So, if the client held this position overnight from Wednesday in to Thursday, then:
Management Fee = 3 x $14.50 = $43.50 (Charge includes Wednesday, Saturday and Sunday)
Example 4: Client Hedged 2 Lots
A client is long 2 lots of USDJPY. She is also short 2 lots of USDJPY so that the position is fully hedged. The management fee for USDJPY is currently $8.50.
So, if the client held this position overnight from Monday in to Tuesday, then:
Management Fee for long position = 2 x $8.50 = $17
Management Fee for short position = 2 x $8.50 = $17
Total Management Fee = $34
Please also note:
All finance adjustments for open positions are carried out at or after 21:59 (GMT)
All FX spot instruments are charged a swap fee, unless you choose the interest-free account, in which case you will be charged a daily management fee.
No finance adjustments are made on open positions on any CFD futures contracts.
How it works
To be eligible to receive the dividends, clients must hold a CFD position in respect of the relevant equity or index on the ex-dividend date. The CFD can then be sold at any point after the market opens on the ex-dividend date and still receive the dividend payment.
The equity and cash index markets may be subject to a dividend adjustment as to reflect that the underlying asset will open at a lower level post-dividend date Ex-dividend will be credited or debited on positions held at 10pm GMT (5pm EST).
House of Borse will process dividend adjustments 1 day prior to the ex-dividend date. Long and short positions will be credited and debited net of tax dividends. Dividend adjustments for non-UK equities vary on local tax arrangements, please contact our trading desk for more information.
Formula: d = p x n
d = dividend
p = position
n = dividend declared
You are long 10,000 shares of Vodafone (VOD.L) with net dividend declared at 2p.
d = 10,000 x 0.02 = £200 (credited)
Short 5,000 shares of Barclays (BARC.L) with a net dividend declared at 5p.
d = 5,000 x 0.05 = £250 (debited)
Dividend adjustments to cash index CFD trades apply as follows: Buy or Long trades are credited with the number of points by which the index concerned has been adjusted x trade size.
Sell or Short trades are debited with number of points by which the index concerned has been adjusted x trade size.
Note: The German DAX 30 index is not subject to adjustments; it is a total returns index and as such all ex-dividends are automatically reflected in the price.
Formula: d = p x n
d = dividend
p = position
n = number of index points (dividend amount)
Long 10 CFDs of US30 with a dividend at 8 index points.
d = 10 x 8 = $80 (credited)
Short 10 CFDs of UK100 with a dividend at 5 index points
d = 10 x 5 = £50 (debited)
For some cash markets, fair value adjustment may be applied where the underlying futures price will be adjusted for financing, dividends, storage and other adjustments.
How to calculate your profit or loss
The formulae for working out your P&L for any CFD shares is shown below
Long (buying): Profit or loss = ( Exit price - Entry price ) * Lots traded
Short (Selling): Profit or loss = ( Entry price - Exit price ) * Lots traded
You decide to buy 100 CFDs in Coca Cola at $45.00
The share price rises +10% due to the release of the company’s quarterly earnings being better than forecasted
You sell 100 CFDs in Coca cola at $49.50
Using the formula above for a ‘long’ trade: Profit or loss = ( Exit price - Entry price ) * Lots traded
The result would be +$450.
You decide to sell 10 CFDs in Amazon at $1,900 with the opinion that the price of the share will fall
Amazon sales data is released and the report states that they have had an increase in sales, as a result the share price rises +1%
You decide to Close you position at a price of $1,919
Using the formula above for a ‘short’ trade: Profit or loss = ( Entry price - Exit price ) * Lots traded
The result would be -$190.
HOW IT WORKS:
If a client holds a Cash CFD or Spot Forex position overnight (i.e. at 5pm EST), including weekends and public holidays, a Financing charge will normally be debited or credited to cover the cost of funding.
For long (buy) trading positions, the client normally pays Financing and as such the trading account will be debited.
For short (sell) trading positions, the client normally earns Financing and as such the trading account will be credited.
The trading account will normally be debited and not credited with the Financing charge when 1−month LIBOR is less than the relevant Interest Mark-up.
Financing will not be debited/credited on a position that is opened and closed on the same trading day.
FOR SPOT FX
If a client holds the currency with the higher interest rate, the account will normally be credited the Financing. If a client holds the currency with the lower interest rate, the account will normally be debited the Financing.
House of Borse rollover rates are calculated by referencing the relevant 1−month LIBOR for all CFD products.
Number of days is 365 for AUD and GBP; 360 for all other currencies.
The interest mark-up rates stated below are indicative only.
Financing Charge Calculation - INDEX CFD
Long Position Financing Cost = Notional Value of Instrument x (Underlying Interest Rate + Interest Mark-up) / Number of Days
Example: Long 250 CFDs of UK100 at a price of 5875.00, GBP based account and GBP LIBOR = 0.50% Financing Cost
= ((250 x 5875.00) x (0.50% + 3.0%)) / 365 = GBP 140.84
Short Position Financing Cost = Notional Value of Instrument x (Underlying Interest Rate - Interest Mark-up) / Number of Days
Example: Short 100 CFDs of DE30 at 9140.00, EUR based account EUR LIBOR = − 0.25% Financing Cost = ((100 x 9140.00) x (−0.25% − 3.0%)) / 360 = EUR 82.51
Financing Charge Calculation - SPOT FOREX
Swap rates are calculated by using 1−day interest rate differentials for the two currencies concerned in the position.
FX Long Position Financing Cost = Quantity x Swap Rate x (-1)
Example: Long 500,000 USD/JPY at 17:00 ET, GBP based account. Financing Cost = 500,000 x (−0.0008) [Swap Rate] x (−1) = JPY 400
To convert back to account currency
GBP/JPY = 157.10
Financing Cost in Account Currency = 400/157.10 = GBP 2.54
FX Short Position Financing Cost = Quantity x Swap Rate
Example: Short 200,000 EUR/USD at 17:00 ET, USD based account. Financing Cost = 200,000 x 0.000019 [Swap Rate] = USD 3.80
Financing Charge Calculation - SPOT OIL
Rollovers for Spot Oil are calculated based on business days, therefore, no additional charges for carrying positions over a weekend or holiday will be applied.
(EOD mid-price of far month – EOD mid-price of near month) ƒ number of days + Mark-up
Example: number of days = 20 Relevant price of near month = 45.42 Relevant price of far month = 45.68 Financing Cost = (45.68 − 45.42)/20 + 0.01 = 0.023
The calculation provided above for SPOT OIL is to indicate the financing charges calculation, which form basis for the Swap points applied to applicable trades.