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Introduction of Carrying Cost and Holding Fee from 1 July 2017

The global standards on bank capital (the Basel agreements) set stronger prudential rules for banks to keep sufficient capital reserves and liquidity to make them even more solid. These regulatory requirements are increasing the cost of holding our Client’s positions and conducting business in Futures, Listed Options and Expiring CFDs.

Carrying Cost on Futures, Listed Options and Expiring CFDs

From 1 July 2017, overnight positions in Futures, Listed Options and Expiring CFDs will be subject to a carrying cost.

The carrying cost will be calculated on the basis of the daily margin requirement and applied when a position is held overnight.

The funding rate used for calculating the carrying cost is based in the relevant Interbank-rate + markup (150 bps).

Carrying Cost = Margin Requirement * Holding time * (Relevant Interbank rate + Markup) / (365 or 360 days)

Example: You BUY 1 Futures Contract in E-mini S&P 500 with a margin requirement of USD 5,500 and hold the position for 5 days.
Nominal Value 115,000 USD
Margin Requirement: 5,500 USD
   
Holding time: 5 days
1M USD LIBOR rate: 1.00%
Markup: 1.50%
   
Carrying cost: 5,500 * 5 * (1.00%+1.50%) / 360 = 1.91 USD

Holding Fee on Long Positions in Listed Options

From 1 July 2017, a Holding Fee on bought long dated Listed Options will apply.

The Holding Fee varies depending on the underlying asset class (Category) and will only apply to bought options with maturity beyond 120 days.

The fee will be calculated based on the below schedule and charged end-of-month.

Bought Options daily holding fees per million (Nominal Value)
Category Interest rates Foreign-exchange rates and Gold Equities Precious metals, except gold Commodities, except precious metals
< 120 days maturity n.a. n.a. n.a. n.a. n.a.
>120 days maturity 0.10 0.70 1.10 1.00 1.60

 

Holding Fee per day = Nominal Value / 1,000,000 * Underlying Category Fee

Example: You BUY 1 PUT Option on Coca-Cola Co, Expiry in 160 days, Strike 40.
Nominal Value 4,000 USD (Strike Price * 100 shares)
Category Equities (>120 days maturity)
Fee per million 1.10 USD
   
Holding Fee per day: 4,000 / 1,000,000 * 1.10 = 0.0044 USD