Can someone explain these charges?

[superdry]

Morning all,

 

I am new to IG and have a question about the daily FX interest. Sorry if I have posted this in the wrong place...

 

On my demo account I have charges for daily FX interest for AUD/USD:

 

04/09- 1 day

07/09- 3 days

08/09- 1 day

11/09- 1 day

 

The only times that I've left a trade past 10pm was one opened on 31/08 (closed at 23:44) and one opened on 4th (closed on 5th at 01:58). Can someone explain how this works? I know if you hold over a weekend you'd pay 3 days but I haven't done that. Also I don't understand why there are charges come in on the 8th and 11th when the last time I held past 10pm was the 5th!

 

Sorry if there is a simple answer that I just can't seem to see... Any pointers would be much appreciated.

 

 

[CPC69]

Hi,

 

I've also been charged fees for trades opened at 9:59pm, which have only been open for a couple of hours at a time;

 

1. 1 day interest charge

2. 1 day interest charge

3. 4 day interest charge

 

All these where charged between Monday and Wednesday this week. I've asked IG to look into it and explain why I've been charged like this as it seems to be in breach of their T&C's.

 

Good luck!

[CPC69]

This is the reply from IG explaining the fees. It explains the fees clearly, but I think the level of fees is very high.

 

The reason for the four day interest is due to how FX trades settle. The majority of FX pairs will settle on a T+2 basis, meaning that trades held through the cut-off time of 10pm UK time on a Wednesday will settle on Friday, and therefore be take into account the weekend as well.

 

For this reason you'll usually be charged three days interest on a Wednesday night and one day for the other weekdays. The reason for the fourth day in this instance is because it's a public holiday on Monday in Japan. Therefore adding the extra day.

 

"As mentioned, if you hold a trade through 10pm UK time you will qualify for the interest charge. The fee specifically for FX is known as the TOMNEXT rate which IG take from the underlying market and apply a 0.8% admin fee to."

[JamesIG]

Hi  - thanks for your contributions to IG community over the last couple of days, and for coming back to specifically post and help others after you received a reply directly from our Trading Services team. 

 

I just wanted to add some clarity on the charges for the overnight TomNext all in rate. As previously discussed these are only imposed if you hold an FX trade through 10pm. You can call us to get an indication on TomNext rates on specific pairs (there are too many to post on Community) but as an example cable is 0.21 / -0.84 

 

Therefore if you are long £1 a point at 1.3070 your notional trade size is £13070. You would therefore pay 84p per night (at 10pm) to hold the position for one day. 55p of this will be down to the underlying market (the underlying market TomNext rate), whilst 29p will be the IG charge (i.e. the cost of borrowing 99% of the notional value of the deal to place the trade). 

 

The long and short of it is the IG charge is £13070 * 0.008 / 360 = 28.6465p rounded to 29 pence. 

 

I hope this clarifies things. 

[CPC69]

Awesome, thanks for the clarity. I confirmed this last night with a EUR/JPY trade, which I opened at 10:01pm and haven't paid any charges. Although, the spread at that time of night widens which can be challenging.

 

Thanks.