What can impact the rollover value on Indices?
Rollover(Financing Costs) for indices can be impacted by many factors:
- Cost of carry and dividends make up the overnight credits/debits.
- The value of these two variables is independent of one another.
- The overall credit/debit that is applied to your account will depend on the size of the open trade.
Financing Costs:
- Interest rates are a factor in any market. FXCM’s daily interest debit or credit amounts (hereafter “rollover”) are based on the total face value of the position.
- Our rollover rates are calculated by referencing the relevant 3 month LIBOR for all index products. Each day, the rollover amounts per lot are shown transparently in the simple dealing rates window. Index positions that are open at the close of business on Friday will incur 3 day rollover.
- For example, if 3 month USD LIBOR is 4.50% and FXCM is applying a haircut of +3/-3% a long position would pay 7.50%/ 360 per day, whereas a holder of a short position would receive 1.50%/360 per day.
- It is worth noting that FXCM references the relevant underlying 3 months LIBOR rate for the native currency which an instrument is quoted. For example, GER 30 is quoted in euro, therefore, FXCM will reference 3 month Euro LIBOR. Similarly, for clients who have open UK100 positions, the reference interest rate would be 3 month GBP LIBOR and so forth.
Dividends:
- Applicable to most cash indices, dividend payments will be applied as debit/credit along with the rollover to your open positions. Adjustments will apply on the eve of the dividend date of the constituent members of the relevant index. The adjustment will appear as part of the roll over debit/credit on your statement.
- When an equity goes ex-dividend, the price of that equity theoretically decreases by the dividend amount. In practice, this does not always happen as there are many market forces affecting an equity price. The amount of points an index cash CFD drops by is dependent on the weighting of the equitywithin the index. If more than one constituent equity of an index CFD goes ex-dividend on the same day, the amount of points each equity will theoretically cause the sector or index to drop by is added together to calculate the total amount of dividend points or ‘drop points’. FXCM will either collect or pay dividends on the hedge positions that we have entered into against client issued CFDs