Daily Commodities Interest that IG charge

[furnessc]

Could someone explain the outrageous Daily Commodities Interest that IG charge when one has a long position in Oil? I understand that in addition to the carry interest, the major element relates to a daily adjustment between the next two months future prices.

 

Having spoken to their support, I was told that these charges are a way of adjusting the price during the month. He went on to say that it was not really a net cost since we get it back in a lower margin on the basis that they would require a higher margin had they used an alternative approach.

 

This smacks of a scam as the margin is not a “cost” as such. More importantly we are for ever chasing a moving target as our purchase price is also inflated. So even if one is showing a profit, in fact after these charges one is making a huge loss.

[CederTrader]

On 26/06/2020 at 01:04, furnessc said:

Could someone explain the outrageous Daily Commodities Interest that IG charge when one has a long position in Oil? I understand that in addition to the carry interest, the major element relates to a daily adjustment between the next two months future prices.

 

Having spoken to their support, I was told that these charges are a way of adjusting the price during the month. He went on to say that it was not really a net cost since we get it back in a lower margin on the basis that they would require a higher margin had they used an alternative approach.

 

This smacks of a scam as the margin is not a “cost” as such. More importantly we are for ever chasing a moving target as our purchase price is also inflated. So even if one is showing a profit, in fact after these charges one is making a huge loss.

Yes, I noticed the high daily overnight interest for Gas. It is so much higher than the Equities CFDs. My overnight Equities CFD was -$0.08 to Gas -$5.40. The notional value is just 4x the Equities.

[funkyfred]

long the futures contract instead, bigger spread but no daily charges

these massive carry charges have been a "feature" of ig oil since the massive swings started, although i'm not clear why they have persisted now the gap between the spot and futures prices is minimal again. bear in mind you actually get paid these huge fees if you short spot oil, so i'm not sure calling it a scam is accurate.

out of interest, what is the fee per point

Edited August 1, 2020 by funkyfred