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Increase in funding costs


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I can't see a thread related to this issue. Maybe I was dreaming it, but I think I have seen sight of some funding changes put through by IG. It may not have attracted much attention.

Basically, in a nutshell, my understanding is that if you were trading US500 say in Sterling, any overnight positions would incur a cost of the Sterling Base rate plus IG's premium of 2.5%. I think that makes 3.25% per annum.

Now, I believe it says that you will be charged on that security at the "relevant interbank rate". Not the currency you are trading in but the domicile of the security. So US500 would bear the cost of the Fed rate 2.75% I think plus the IG premium of 2.5% making 5.25%. Or something like that.

Happy to be corrected on this understanding but that is pretty material if you are a position or swing trader and could, if one does not change one's method of trading lead to an increase in the % of traders who will lose money going forward.

I'm not sure of the justification re this. It is certainly an innovative move by IG versus the other spreadbet providers.

I would be interested to hear from others on this. Happy to be proven wrong on this or whether it be confirmed by IG posters?

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  • 1 month later...
Guest Alexio

Yep I've just noticed this. (shows how much attention I pay to what I'm being charged) 

Since early Feb, overnight charges on long s&p500 have essentially doubled for me. I've looked at the email they sent round early Feb about changes in margin and there's absolutely no mention of them now calculating it on the dollar base rate rather than the pound. 

Despite them claiming "transparent fees" I think they were hoping no one would notice. Essentially it is highway robbery. 

I will be opening an account with another provider this morning and they can kiss goodbye to all the fees I was paying. 

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