Margins and Financing

We don’t charge commission with Spread Trading however if you hold a position over night or without a set expiry date, an overnight financing charge may be applied. For long positions or buys you’re usually charged, for sells or short positions you’ll usually be credited.

Financing applies to the percentage of the trade not covered by the margin. For example if a margin on a particular investment is 10% then financing applies to the remaining 90%.

How to calculate the financing charge on a Spread Trade?

You’d use the following formula:

F = V x i / b, where:

F= daily financing charge.

V = value of equivalent holding of the underlying financial instrument, minus margin requirement.

i = applicable financing rate.

b = day basis for currency (365 for GBP and AUD, 360 for all other currencies).

Your account will be debited a financing amount for each long position that you hold, and should be credited a financing amount for each short position that you hold. Please note that if a short position's calculation produces a figure below zero (i.e LIBOR is at a lower rate than that of our charge), this figure will be debited.

The financing rates used are:

LIBOR, or 'London Interbank Offered Rate' that is a daily rate based on the interest rates at which banks lend to each other.

The Australian equivalent is RBA IOCR or Reserve Bank of Australia Interbank Overnight Cash Rate.

What is a Margin?

Margin Requirement is the deposit you are required to make to open each new trade on your account. The Margin Requirement is calculated as a percentage of your position. This percentage varies depending on the market and can be found within the Market Information section of the Trading Platform. The Margin Requirement can be expressed as a number or a percentage.

If expressed as a number:

You open a FTSE 100 trade (margin Factor = 400) with a £10 stake.

Margin Requirement + £10 x 400 = £4000

If expressed as a percentage:

Margin Requirement = (Quantity x Price) x Margin Factor

(1,000 x 1.85) x 10% = £185

What is Margin Close Out?

The Margin Level Indicator within the Trading Platform shows what level of cover you currently have against your open positions. If this percentage falls below 80% then your position will be automatically closed as you do not have enough funds in your account (including any profit/loss from open positions) to cover your overall exposure.

Please make sure that you've read, and taken the necessary steps to understand, our General Terms and Key Service Features before opening an account.

Important Information                         General Terms                        Key Service Features 

Margins and Financing                    Going long or short                     Apply for an account 

IWeb Spread Trading is provided by City Index Ltd and therefore your contractual relationship is with City Index.
City Index Limited is authorised and regulated by the Financial Services Authority (FSA Register Number 113942).