FX Commission & Financing
Commission
We do not charge any commission on trading FX. The price you see is the price you get2. We make our money from the spread, which is the difference between the Buy price and the Sell price. We endeavour at all times to keep this spread as narrow as we can buy using several high quality price feeds and combining them to give us what we believe to be one of the best prevailing FX rates available in the world.
Financing
If you keep a position open overnight then it will be subject to financing. Overnight in the FX market usually means past 10pm London time, but this can change with daylight savings adjustments.
The FX market is a little different to some other markets in that it generally trades two working days ahead. This is known as Spot. So on a Monday, if you do a trade in FX then you are dealing for Wednesday's value date. This means that on Wednesday you would settle whatever FX trades you had done on the Monday. You might have sold 500,000 GBP/USD for example. So on Wednesday you would pay £500,000 to the buyers UK bank account and they would pay you the Us Dollar equivalent to your US bank account.
As we offer a margin FX business, we never reach settlement because as long as you keep the position open we roll it forward every day so that it never reaches maturity. We do this by applying a Tom/Next adjustment. This stands for tomorrow/next which is basically a financial adjustment made to your position when there is just one day to go before maturity (ie tomorrow) to move it to Spot (ie two business days away).
To give our clients the best rates we can we use 'market rates' for this adjustment ². These are usually much more competitive than just using a normal interest rate adjustment like some of our competitors. It is calculated by using the tom/next deposit rate for the currency you have bought and using the tom/next borrowing rate for the currency you have sold.
¹ Tax laws can change and will vary in jurisdictions outside the UK
² Subject to our Terms of Business.
