Market underlying currency

[RichardSmith]

I'm wondering if there is a way to see underlying currency for all markets available in IG (apart from FX). This is important to me as  I can see overnight swaps for currencies and spot metals but don't see them for other markets.

[JamesIG]

hi @RichardSmith - are you referring to overnight funding costs? Unfortunately this isn't available on other assets outside of FX at present. 

[RichardSmith]

H @JamesIG, thank you for your reply. I indeed am referring to overnight funding costs and can't figure out how it is being calculated for Indices and Commodities.

Say I'm shorting Nickel, Platinum and No Lead Gasoline. I'm being credited for holding Platinum and Nickel positions but being charged (a lot!) for holding the Gasoline positions.

 

I was referred to this page by support that would suggest I should be credited if I have short positions though it isn't so. Any help to figure out the right formula would be appreciated.

https://www.ig.com/en/commodities

Best regards,

Richard

[Caseynotes]

Hi @RichardSmith,  the linked example in the comm page is correct but not well explained.

There is one calc for fx and spot metals, and then another calc for all other assets, see this page;

https://www.ig.com/uk/help-and-support/spread-betting-and-cfds/fees-and-charges/why-is-overnight-funding-charged-and-how-is-it-calculated-

Note that the 'IG rate'  (IG commission +/-  interbank rate) is different for GBP or USD based assets, and is plus or minus for long or short.

Use the approp boxed 'IG rate' to replace the (2.5% +/- Libor)  in the calc below for indices and commodity markets, (the interbank rate has not changed much).

For Long;

For Short;

So for a long Dow trade it's 5.02% and for a short Dow trade it's -0.02%.

So for long Dow;

Size x Closing price x 5.02% / 365

 

 

Edited April 11, 2019 by Caseynotes

[RichardSmith]

Thank you for your reply @Caseynotes. I sort of understand how it works for FX and spot metals and read the article you're referring to though what I don't understand is how the overnight charges are being calculated for Commodities. I may be repeating myself here but say why am I being charged for holding a short Gasoline position while being credited for holding a short Nickel position.

I found two topics that come close to the answer, what I'm looking for is a formula say with a current Gasoline price example or a table that @JamesIG shared in the second topic

 

 

[Caseynotes]

@RichardSmith, yes, you are right some of the commodity funding charges are a hand full, my example was based on indices.

The charge isn't automatically debit for longs and credit for shorts though, if you look at the pic you posted just above the longs (blue column) can be either plus or minus, same for the shorts (red column). I believe this is because the commods have the futures factor incorporated into the calculation and the front futures price may be more or less than the next futures price so you may end up with a positive or negative number for the (P3 - P2) part of the calc as in the link you posted above. So the final result for either a long or a short could work out to be positive or negative.

[JamesIG]

You're right! It's certainly not an easy calculation, however what we've done here is create a continually traded assets on something which is usually only future traded. Without this every month your position would have to close, roll into the next future, and then open again. 

The reason for the financial gain or debit is down to the way the futures curve is positioned. Some assets get more expensive the further out in time you go, whilst others get cheaper. In other words some assets are more expensive the further out you go (for example oil which suggests people are more willing to pay a little more to have oil delivered in the future - that can be due to expected increase in demand over summer maybe, the fact there is a cost to hold oil in tankers etc, or a number of other things), whilst others are cheaper (for example some soft commodities which may devalue the further out you go). This can be down to a number of things, but primarily the demand for delivery at that point and time. 

[Caseynotes]

Thanks @JamesIG, that the futures price may be more expensive or cheaper was the point I was so cack handedly trying to make above.