Just checked my CMC account and note that CMC are charging me 30% for financing long positions in WTI oil.
To put that into persepective, that's 30% per year on the entire worth of your position folks. Yep, at only £1 per point your position is worth £9000, so to keep a long position in WTI CMC will charge you an amazing £2700 per year for a £1 pp bet.
Another way of putting it is that your trading must make you (net after all losses etc.) 30% per year just to break even. How many people net 30% pa?
This is an unbelievable rate, I am utterly astonished at what is happening here.
I have a similar position open in the futures markets and it's costing me (effectively) zero . Let me explain this: CMC have abandoned futures bets for their new platform and replaced them with rolling cash bets, for which they charge a financing rate consisting of two elements: financing (which is the normal element you would expect consisting of the interest on the value of the position) and 'carrying costs'. Carrying costs are the problem.
While the financing element is broadly equal to the intrinsic interest charged within the futures contract (but slightly more expensive; this is in line with other spreadbetting firms), the 'carrying cost' would appear to be a bonus for CMC.
If a bet is taken 'old style' on a futures contract, the intrinsic cost of the bet will be roughly equal to the central banks rate (say 1%). A SB firm will add a few percent if they operate rolling cash bets instead of direct bets on the futures price, so you pay say 3%.
CMC are charging an additional 27.5% for the 'carrying cost'. Adding this to the extra 2% premium over the futures style bet nets them 29.5% for financing your bet (versus a futures bet).
These costs are crippling, no business can survive with these sorts of costs, nor can a trader.
As far as I can tell (further info has not been forthcoming after my phone call asking for precise information on how this charge is calculated) CMC claim this mirrors real-world equivalent costs for storage of the spot commodity and the such-like, which doesn't really wash I'm afraid.
CMC have abandoned many markets and all futures bets for the new platform. Spot bets would appear to be prohibitively expensive for non-day traders; futures bets, or futures derived bets are not available.
My advice would to be very careful before using a CMC new platform account - when compared to costs elsewhere, including their own MarketMaker platform which is being retired, the costs are prohibitive. A futures bet taken elsewhere will net you around an additional 30% per year in profits.
To put that into persepective, that's 30% per year on the entire worth of your position folks. Yep, at only £1 per point your position is worth £9000, so to keep a long position in WTI CMC will charge you an amazing £2700 per year for a £1 pp bet.
Another way of putting it is that your trading must make you (net after all losses etc.) 30% per year just to break even. How many people net 30% pa?
This is an unbelievable rate, I am utterly astonished at what is happening here.
I have a similar position open in the futures markets and it's costing me (effectively) zero . Let me explain this: CMC have abandoned futures bets for their new platform and replaced them with rolling cash bets, for which they charge a financing rate consisting of two elements: financing (which is the normal element you would expect consisting of the interest on the value of the position) and 'carrying costs'. Carrying costs are the problem.
While the financing element is broadly equal to the intrinsic interest charged within the futures contract (but slightly more expensive; this is in line with other spreadbetting firms), the 'carrying cost' would appear to be a bonus for CMC.
If a bet is taken 'old style' on a futures contract, the intrinsic cost of the bet will be roughly equal to the central banks rate (say 1%). A SB firm will add a few percent if they operate rolling cash bets instead of direct bets on the futures price, so you pay say 3%.
CMC are charging an additional 27.5% for the 'carrying cost'. Adding this to the extra 2% premium over the futures style bet nets them 29.5% for financing your bet (versus a futures bet).
These costs are crippling, no business can survive with these sorts of costs, nor can a trader.
As far as I can tell (further info has not been forthcoming after my phone call asking for precise information on how this charge is calculated) CMC claim this mirrors real-world equivalent costs for storage of the spot commodity and the such-like, which doesn't really wash I'm afraid.
CMC have abandoned many markets and all futures bets for the new platform. Spot bets would appear to be prohibitively expensive for non-day traders; futures bets, or futures derived bets are not available.
My advice would to be very careful before using a CMC new platform account - when compared to costs elsewhere, including their own MarketMaker platform which is being retired, the costs are prohibitive. A futures bet taken elsewhere will net you around an additional 30% per year in profits.
Last edited:
