ThinkForex Cash Index Interest and Dividends

Cash Index Financing Adjustments

All finance adjustments for open positions in cash indices are carried out at or after 00:00 Server time (7am AEST). 

As you hold a position overnight (i.e. 7am AEST), a finance adjustment is made to your account.

This is calculated as follows:

f = (s * p * r) / d

where

f = daily financing charge
s = trade size (lots)

p = overnight close price
r = relevant overnight interest rate PLUS 250 basis points for long positions, MINUS 200 basis points for short positions

d = number of days, i.e. 360

Example: Sell 10 CFDs on AUS200cash at a price of 5577.0; AUD LIBOR rate is 2.50%

f = (s * p * r) / d
s = trade size (lots), e.g. 10
p = overnight close price, e.g. 5577
r = relevant overnight interest rate PLUS 200 basis points for long positions, MINUS 200 basis points for short positions, e.g. (2.50% - 2.00%) = 0.50%
d = number of days, i.e. 360

So, the overnight financing charge on this position would be :
f = (10 * 5577 * 0.50%) / (360 * 1)
f = AUD 0.77 credit

Note: short positions are credited when LIBOR is greater than basis points to be deducted from LIBOR, otherwise they are debited

Example 2: Buy 10 CFDs on SPX500cash at a price of 1964.75; USD LIBOR rate is 0.09110%

f = (s * p * r) / d
s = trade size (lots), e.g. 10
p = overnight close price, e.g. 1964.75
r = relevant overnight interest rate PLUS 250 basis points for long positions, MINUS 200 basis points for short positions, e.g. (0.0911% + 2.50%) = 2.59110%
d = number of days, i.e. 360

So, the overnight financing charge on this position would be:

f = (10 * 1964.75 * 2.59110%) / (360 * 1)
f = $1.41 debit

Note: long positions are debited the rate plus LIBOR.

The financing charge for CFD trades is levied for each day that the trade remains open (including weekends and public holidays). The financing charge is applied to all open positions at 00:00 on each day server time (7am AEST).

Financing is applied on weekends (3 days on Friday for Friday, Saturday and Sunday)

Positions held at 7am AEST on a Saturday will be subject to a three day roll-over as the positions are being rolled from a Friday value date to Monday value date (three days).

Index Dividends

When an individual stock which is a constituent of a cash stock index goes ex-dividend, this will have a weighted effect on that cash index, known as the “index dividend” or “index impact”. TF Global will make adjustments to those accounts with a position in an affected index, if that position is open at 7am AEST o n th e day of the ex-dividend date of the constituent shares.

TF Global will credit long positions and debit short positions (by means of points added to [for short positions] or subtracted from [for long positions] the finance charge) as follows:

Index dividend x position size

The weighted effect of an individual stock’s dividend is calculated as follows:

Index Dividend = Share Dividend x (Shares in index / Index Divisor)

The “Index Divisor” varies from index to index, It is a value which is adjusted by the underlying exchange to off-set the effect of changes resulting from, but not limited to, stock splits, bonus issues and constituent substitutions. This allows the index value to remain comparable over time. TF Global uses various data providers in determining its calculation of the index dividend.

The DAX 30 index is not subject to adjustments; it is a total returns index and as such all ex-dividends are automatically reflected in the price.

Fair Value: TF Global bases the quote of its cash indices on a corresponding futures market. As a result we include a “fair value” adjustment in the quote to reflect a derived cash price of the index as opposed to the futures price. Fair value is a constantly changing variable and will vary during trading hours according to TF Global's estimate of current fair value. TF Global will adjust its internal fair value calculations at 7am AEST on the day constituent shares going ex-dividend, to reflect an index dividend.

Contact ThinkForex

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