Costs of Trading
- What is a spread?
- What spreads does City Index charge?
- How do I know what the spread is?
- If I place a large trade will the spread increase?
- Do you charge commission on trades?
- How much commission do you charge on equity CFDs?
- What are financing charges and what do they apply to?
- What time is financing applied?
- What is the finance charge for CFD trading?
- How are finance rates calculated?
- Financing on hedged trades
- Special borrowing costs
- Do you charge to make deposits into your account?
- What is a back to base currency conversion?
- Will I pay a fee if I don't use my account?
- Exchange data fees
- Are there charges for placing orders?
- How are overnight FX financing charges calculated?
- Italian Financial Transaction Tax
1. What is a spread?
When a price for a market is quoted, you will actually see two prices. The first price, known as the bid, is the sell price and the second price is the buy price, known as the offer. The difference between the sell and buy price is called the spread. The tighter the spread, the less the market needs to move in order for you to break even.
2. What spreads does City Index charge?
City Index may offer both fixed and variable spreads, depending on the market you wish to trade.
Fixed spreads don't change according to market conditions such as volatility or liquidity. Fixed spreads may either be offered for a defined period of the day, or throughout specific trading hours. Spreads may be wider in less popular and less liquid trading hours.
For example, the UK 100 has a fixed spread of 1 point between 8-4.30pm (GMT). Outside of these hours, the spread will widen to other fixed amounts. See Indices for details.
Variable spreads may fluctuate throughout the day according to different factors such as underlying liquidity or market volatility. With variable spreads, when City Index lists a spread we will quote you the minimum spread it could be, plus an average spread for a defined historical period of time.
3. How do I know what the spread is?
When you open an order ticket, the current spread will be shown on the order ticket. The product pages on our website detail spreads of all of our popular instruments.
4. If I place a large trade will the spread increase?
The current spread that is shown for an instrument is good for the maximum trade size shown on the market information sheet for that specific instrument. Please note spreads may increase with large size trades. See details on margin.
5. Do you charge commission on trades?
City Index also does not charge any commissions on CFD or FX markets, with the exception of CFD equities.
6. How much commission do you charge on equity CFDs?
CFD equity commissions vary by market, for Australian equities the charge is 0.09% of the consideration.
Details on the commission rates for each equity can be found within the Market Information sheets on the platforms.
7. What are financing charges and what do they apply to?
Financing is a fee that you pay to hold a trading position overnight on leveraged trades. Essentially it is an interest payment to cover the cost of the leverage that you use overnight.
Overnight financing charges are applied to positions that have no set expiry date, for example trades for CFD. As with our low commissions and tight spreads, these charges are competitive in order to keep your trading costs low.
You will not pay a finance charge on futures trades as they already have the cost of carry built into the spread.
There may be instances when a Daily Financing Fee is charged to you on short positions, rather than paid to you. This may occur if LIBOR (or RBA IOCR for Australia) is at an exceptionally low rate.
8. What time is financing applied?
The daily financing fee will be applied to your account each day that you hold an open position (including weekend days). Financing is processed daily at 5:00 pm ET, at which time any open positions will be rolled and a debit or credit will be applied to your account. We do not charge financing on intraday trades.
Financing is applied at 17:45 London time for the majority of our markets. For details of the exact times on all of our markets, please view the market information sheet in the platform.
9. What is the finance charge for CFDs?
The financing rates are:
|Country||Financing on long positions||Financing on short positions|
|Australia||Deposit + 2.5%||Deposit - 2.5%|
|UK||LIBOR +2.5%||LIBOR -2.5%|
|US||LIBOR +2.5%||LIBOR -2.5%|
|EU||LIBOR +2.5%||LIBOR -2.5%|
|Other international||Contact Client Management||Contact Client Management|
10. How are finance rates calculated?
Financing charges for position which remain open at our market close are calculated using the following formula:
Short Positions F = V × I / b
Long Positions F = V × I / b, where:
- F = Daily Financing Fee
- V = value of equivalent (quantity x end of day closing price)
- I = applicable Financing Rate
- b = day basis for currency (365 for GBP, HKD and AUD, 360 for all other currencies)
The daily financing fee will be applied to your account each day that you hold an open position (including weekend days). The financing rates are set at benchmark regional interest rate +/- 2.5%.
For example, you are long £10 on the UK 100 and hold the position overnight. UK 100 closes at 6500.
The LIBOR rate for that day is 0.33
V =10 (quantity) X 6500 (end of day closing price ) = 65000
I =0.33 +2.5% 2.88% 65000 x 2.88% = 1872
1872 / 365 = £5.12 (Financing paid by you per day)
11. Financing on hedged trades
If you have a hedged position open overnight, you will be charged overnight financing on both sides of the trade.
12. Special borrowing costs
Special borrowing costs are incurred when our brokers charge an inflated borrowing fee, usually due to lack of liquidity. Customers will receive advance notification from our trade desk if they trade a market with a borrowing cost and if you incur a charge, it will be deducted from the relevant annual interest rate.
Your positions will also be subject to any applicable corporate actions or dividends. For more information please view the corporate actions section in trading orders and positions.
14. Do you charge to make deposits into your account?
We do not charge for making deposits or withdrawals from your account.
15. What is a back to base currency conversion?
With CFD trading accounts, the trade P&L will be in the currency of the instrument you trade.
For example you may have AUD as your base currency for your CFD account, but if you trade the Wall Street the profit and loss for that trade will be in USD. By trading a host of international instruments you would end up with balances that are comprised of multiple currencies.
City Index has a process called ‘Back to Base' which automatically converts any realised profits and losses, adjustments, fees and charges that are denominated in another currency, back to the base currency of your account before applying them to your account.
For example, If your base currency is Australian dollars and you place a CFD trade on the Wall Street Index, as the Wall Street Index is a US dollar denominated market, your profits or losses, as well as any additional charges when applicable (such as commission, financing, dividends, corporate actions etc.) will be denominated in US dollars. Back to Base (Currency Conversion) automatically converts these charges back to your nominated base currency, which in this example, would be Australian dollars. Traders' existing cash balances which precde the 28th April 2012 will not be affected.
We will always apply commercially reasonable rates for Back to Base (Currency Conversions). Conversions and the rates applied will be disclosed on your contract notes and statements.
16. Will I pay a fee if I don't use my account?
Where no activity has occurred on your account(s) for a period of 24 months or more, your account(s) will be deemed inactive. 'Activity' is defined as placing a trade and/or maintaining an open position during this period. Placing an order on an account without executing a trade will not qualify as ‘Activity’ for these purposes. A monthly inactivity fee of $15 (or currency equivalent) in aggregate (or your cash balance if less than $15) will be applied for accounts that are inactive for 24 months or more.
If your account has been inactive for 3+ years we'll need to reassess your trading experience and ensure that we have your up-to-date contact details. You will need to complete our account reactivation form and a member of our Account Management Team will be in touch to let you know if we need anything further from you or to let you know that your account(s) have been reactivated.
17. Exchange data fees
Exchange data is the data that is fed into the trading platforms from exchanges or licensed distributors and is used to display market prices and movements. We do not charge our clients anything in return for this exchange data, and City Index clients also benefit from our price matching feature where we strive to match or improve upon the underlying exchange price.
18. Are there charges for placing orders?
There are no charges for placing standard orders such as stops and limits.
There is a charge for placing guaranteed stop loss orders. GSLOs are not available on all markets, and information on charges and available markets can be found within the markets information sheets on your platform.
19. How are overnight FX financing charges calculated?
Should you hold a position overnight, there will be an overnight financing adjustment. We use swap points to calculate the daily overnight financing adjustment amount for FX pairs. Note that on positions held overnight on Wednesdays, 3 days are charged to cover financing over the weekend.
We run an end of day process, where all positions held open during that time will be debited/credited. Clients who hold long positions will be credited/debited by –1 x notional amount x swap points unit quote currency, while short positions will be debited/credited by notional amount x swap points in unit quote currency.
For EUR/USD, if swap rates were 0.817/1.28, on a long position of €10,000 you would be charged $1.28 to hold the position overnight.
If you were to sell EUR/USD for €10,000, you would receive $0.82 overnight. These amounts are then converted back into your base currency.
20. Italian Financial Transaction Tax
How are Italian CFDs taxed?
Italian derivatives are subject to the Italian Financial Transaction Tax (IFTT), which came into effect on 3 September 2013.
This tax applies regardless of your place of residence or the place where your transactions have been concluded.
To comply with Italian law, we apply the tax to all CFD trades that have an Italian index or in-scope Italian share as their underlying market.
How does the tax apply for CFDs?
The tables below show how much tax you will be charged when trading each CFD product. The tax will be calculated on a trade basis. Any tax due will be charged to your account after the execution of your trade.
Please note that these amounts are indicative only and may be subject to change. For the latest information about tax charges, please contact our client services team.
You will be charged the IFTT according to the following table if you trade CFDs on the Italy 40. The tax charge will be based on the notional value of the trade.
|Notional Value of the contract in Euro||Up to 2,500||2,500 – 5,000||5,000 – 10,000||10,000 – 50,000||50,000 – 100,000||100,000 – 500,000||500,000 – 1,000,000||Over 1,000,000|
|IFTT in Euro||0.25||0.5||1||5||10||50||100||200|
Only CFDs based on Italian shares with a market capitalisation above 500 M€ as set out by the Ministry of Finance in December 2012 are currently in scope and will be subject to the tax. This is subject to change by the Italian government. The tax charge will be based on the notional value of the trade.
|Notional value of the trade (€)||Tax|
|0 - 2500||0.25€|
|2500 - 5000||0.50€|
|5000 - 10,000||1€|
|10,000 - 50,000||5€|
|50,000 - 100,000||10€|
|100,000 - 500,000||50€|
|500,000 - 1,000,000||100€|
Speak to our friendly customer support team