Exchange Traded CFD Interest

Standard over the counter contract for difference financing costs are payable for holders of long positions and paid to holders of short positions. The same mechanics apply to exchange traded cfds.

The contract interest is fixed to a benchmark overnight cash rate in the native currency of the underlying physical product and varied whenever the benchmark cash rate is varied. In the case of Australian denominated Cfds, the benchmark cash rate is the daily overnight target rate published by the Reserve Bank of Australia. US based contract denominations are subject to the published Federal Funds Rate posted daily by the Federal Reserve Bank of New York.

The interest calculations extend to non market days so holders of positions over the weekend are subject to financing charges calculated over Friday, Saturday and Sunday.

Traders and investors will need to be aware of the differences in finance charge calculations on the basis of the underlying currency the contract is denominated in.

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Exchange Traded CFD Open Interest Rates

The daily open interest charge is the charge imposed by the ASX for holding an open position in the market. In traditional over the counter cfd markets this cost is the differential imposed on top of the overnight cash rate commonly referred to as the financing rate.

The OIC rate is set by the exchange and payable daily on open positions and can be changed by the asx in response to market circumstances. It is, however, according to the ASX, intended to be changed infrequently. Holders of open positions pay this charge the next trading day.

Open long positions are subject to the financing rate plus the open interest charge. ie benchmark cash rate + OI charge. Short position holders are subject to the financing rate and receive payment of the open interest charge. ie benchmark cash rate - OI charge.


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