Good morning wager. hope you are well. Please find below explanation regarding bet financing. I have tried to keep it simple. Let me know if you need more assistance and will try to expand.
Bet Financing Costs are only incurred if the bet is carried overnight.
There are two charges (or credit in some cases) that apply to the open bet to carry it forward to the next day.
There is a Bet Borrowing cost which is applied to the unfunded portion of the bet (value of open position minus your cash balance) the amounts are netted off to reduce overnight financing costs to the client.
And there is the Bet Holding Cost which is equivalent to the cost of carry (or credit) and is applied to the total notional value of the trade. E.g. dividends, cost of carriage on commodities etc.
The total Bet Financing cost is the total of the two combined.
The Rates for Bet Borrowing is plus/minus 1% of overnight funding rate. Overnight funding rates vary day to day. Bet Borrowing costs are applied to Indices, shares and Commodities that are held overnight and only applied to the unfunded portion (Notional less Margin).
The Rates for Forex is Tom Next rate plus a maximum spread of up to plus 2 minus 2 percent.
The rate for Bet Holding Costs on Commodities is the present value rate derived from the aggregate weighted futures price. For shares and Indices Bet Holding costs do not apply instead Price Adjustments are applied when there is a price movement associated with a corporate action or dividend declaration.
I have tried to explain it as clearly as I can bearing in mind we are talking about betting and not the purchase or sale of financial products like physical shares etc.
Hope that helps, if not let me know and I will try to expand or you are welcome to come to our offices and we can go over the details to assist you.
Many thanks Peter
Could someone please enlighten me about the financing costs for holding overnight positions with cmc spread betting?
I thought the usual basis was roughly;
Libor + or - 3% / 365
However section 9 of the spread betting terms and conditions says (right at the end of 18 pages of small print – why is this vital information not made more visible!?);
''9. Financing
Applying Financing
9.1 In respect of each Bet that remains open at the end of a Business Day, the Bet Financing Cost will be calculated at the end of each day at 00:00 GMT/01:00 BST. The Bet Financing Cost comprises two components: (a) Bet Borrowing Cost and (b) Bet Holding Cost.''
...It goes on to give the formulae for Bet Borrowing Cost and Bet Holding costs, which to be honest I had no idea how to calculate :/
E.g. Bet Holding costs =
(Stake x Point Multiplier x Opening Bet Price x FX Conversion Rate x Holding Rate Long or Holding Rate Short(as applicable) x number of Business Days) / number of days in the current calendar year.
I've searched everywhere on the cmc website and Google, but still can not find what exactly are these rates?
