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Overnight fees US stocks


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Hello everybody,

I have a question regarding overnight fees for buying stocks on margin.

I'd like to know if I understood how much interest I need to pay if I hold a position overnight.

I am interested in buying a US stock for let's say 50 000 USD.

If the margin requirement is 40%, I put down 20 000 USD and borrow 30 000 USD from the broker (IG).

My overnight fee in that case would be 30 000 USD x (2.5% + LiborUSD1Month(which is ~0.2%))  / 365 = 2.22 USD per day

Personally I feel like that number is a bit too low, so I am wondering if somebody could confirm this calculation.

Thank you very much for your help, very much appreciated.

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On 06/12/2020 at 14:51, AddiH said:

Hello everybody,

I have a question regarding overnight fees for buying stocks on margin.

I'd like to know if I understood how much interest I need to pay if I hold a position overnight.

I am interested in buying a US stock for let's say 50 000 USD.

If the margin requirement is 40%, I put down 20 000 USD and borrow 30 000 USD from the broker (IG).

My overnight fee in that case would be 30 000 USD x (2.5% + LiborUSD1Month(which is ~0.2%))  / 365 = 2.22 USD per day

Personally I feel like that number is a bit too low, so I am wondering if somebody could confirm this calculation.

Thank you very much for your help, very much appreciated.

Hey, 

Below you can see a calculation for your example. 

Formula for shares overnight funding charge = nights held x (market closing price x trade size x (2.5% +/- LIBOR*)) / 365.

So it's not based off the amount you borrow it's based off the size of the position. 

All the best 

 

(I know we're referring to shares in this incident but if you're trading anything else on CFDs make sure the size is the amount of contracts x contract size. 

All the best 

 

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