# Stock borrowing costs

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Does anyone know how the stock borrowing costs are calculated on say Qantas when you short via cfds..

7 hours ago, Ranks007 said:

Does anyone know how the stock borrowing costs are calculated on say Qantas when you short via cfds..

Hi @Ranks007,

LIBOR is calculated according to the currency of the underlying instrument.

If you’re long, you pay LIBOR (or the equivalent interbank rate). If you’re short, you receive it.

Formula: Number of contracts x value per contract x price x (2.5%* +/- LIBOR%*) ÷ 360

Example:

1) You’re long 1500 contracts on Commonwealth Bank of Australia
The contract value is AUD 1
The closing price is 83.90
The 1-month AUD LIBOR rate is 1.89%

Cost = 1500 x 1 x 83.90 x (2.5% + 1.89%) ÷ 360

= A\$125,850 x 4.39% ÷ 360

= A\$15.35 overnight charge

2) Imagine you’re short 2 contracts on the US Tech 100. The contract value is \$20.

The 10:00 PM (UK time) price is 13200.00. The 1-month US LIBOR rate* is 0.11%. Our admin fee is 2.5% annually.

Cost = 2 x \$20 x 13200 x (2.5% - 0.11%) ÷ 360 = \$528,000 x 2.39% ÷ 360 = \$35.05 overnight charge.

*We use US LIBOR and the 360-day divisor since you're trading the US index in USD

I hope that it helps !

All the best - Arvin

Hi Alvin,

I understand the carry/libor costs but I’m trying to understand the stock borrowing costs (seperate to carry/lib or)

I recently shorted 6000 qantas cfds and was charged \$2.13 over a weekend period for “stock borrowing”

I dont care about the amount charged but I’m just trying to understand this particular algorithm..

Kind Regards

Thanks for the question

Daily borrow cost is calculated as follows:

Borrow Cost = Number of shares x Price x Borrow Premium(%)/ 365

I see that you were charged for 3 days because you held the position through a weekend. The borrow premium as it stands on Qantas is 0.9%. I hope this helps in reconciling the charge.

Many thanks

Anda

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