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?
- Will I pay Capital Gains Tax on trading profits?
- Will I pay stamp duty?
- What are financing charges and what do they apply to?
- What time is financing applied?
- What is the finance charge for spread bets and CFDs?
- How are finance rates calculated?
- Financing on hedged trades
- Special borrowing costs
- Do you charge to make deposits into your account?
- Do you charge to make withdrawals from your trading account?
- What is a back to base currency conversion?
- Will I pay a fee if I don't use my account?
- Exchange data fees
- What is central counterparty clearing?
- What types of account are available?
- Is there a charge for central clearing?
- Are there charges for placing orders?
- How does the Italian Financial Transaction Tax affect my trading?
- Financing on Non-Expiring Contract markets
- How are overnight FX financing charges calculated?
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 during less liquid trading hours.
For example, the UK 100 has a fixed spread of 1 point between 8-4.30pm. 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 also detail spreads for 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 does not charge any additional commissions on spread bet markets.
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 UK and most European equities the charge is 0.08% of the consideration, for most US equities it is 1.8CPS and for most Asian equities it is 0.2%. Our minimum commission rates are £10, $10 or €10.
Details on the commission rates for each equity can be found within the Market Information sheets on the platforms.
7. Will I pay Capital Gains Tax on trading profits?
Spread Betting is exempt from UK Capital Gains Tax.
Please note that tax laws are subject to change and we recommend that you seek independent investment advice.
8. Will I pay stamp duty?
Spread Betting is exempt from UK Stamp Duty.
CFD trading is also exempt from UK stamp duty unless you are trading Irish stocks. There is a 1% stamp duty charge for these; however this will be refunded if you hold the position for less than 30 days.
Please note that tax laws are subject to change and we recommend that you seek independent investment advice.
9. 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 both spread bet and 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.
10. 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 applied at 17:45 each day for most markets. For details of the exact times for all of our available markets, please view the market information sheet on the platform.
11. What is the finance charge for spread bets and CFDs?
The financing rates are:
|Country||Financing on long positions||Financing on short positions|
|UK||LIBOR +2.5%||LIBOR -2.5%|
|US||LIBOR +2.5%||LIBOR -2.5%|
|EU||LIBOR +2.5%||LIBOR -2.5%|
|Australia||RBA IOCR +2.5%||RBA IOCR -2.5%|
|Other international||Contact Client Management||Contact Client Management|
12. How are finance rates calculated?
Financing charges for positions 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
F = V x I/b
V = 10 (quantity) x 6500 (end of day closing price ) = 65000
I = 0.33 + 2.5% = 2.88%
V x I = 65000 x 2.88% = 1872
F = 1872 / 365 = £5.12 (Financing paid by you per day)
13. Financing on hedged trades
If you have a hedged position open overnight, you will be charged overnight financing on both sides of the trade.
14. 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.
16. Do you charge to make deposits into your account?
Debit card and credit card deposits and transfers do not incur any charges.
17. Do you charge to make withdrawals from your trading account?
We do not make charges to withdraw money to your credit, debit card or a bank transfer using BACS.
18. 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 GBP 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 pounds sterling 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 pounds sterling. Traders' existing cash balances which precede the 28th April 2012 will not be affected.
We will always apply commercially reasonable rates for Back to Base Currency Conversions (which may be up to and including +/- 0.5% away from our quoted prices or rates from time to time). Conversions and the rates applied will be disclosed on your contract notes and statements.
Spread Betting accounts are not affected because all trades take place in one base currency, usually sterling.
19. Will I pay a fee if I don't use my account?
If you have not used your account for 36 months (retail clients) or 12 months (professional clients) it 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 £12 in aggregate (or your cash balance if less than £12) will be applied for accounts that are inactive for 12 months or more.
If your account has been inactive for 3+ years (retail clients) or 1+ years (Professional clients) 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.
20. 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.
21. What is central counterparty clearing?
Central Counterparty Clearing is the model of trading used by City Index. In this model, a clients' credit exposure to his/her broker is transferred to a central clearing house. It forms one of the European Union's (and wider G20's) key tenets in respect to necessary financial reform following the recent global economic crisis and is aimed at increasing stability in the over-the-counter (OTC) derivatives markets by providing greater transparency and reducing counterparty risk.
In practical terms, in a Central Counterparty Clearing model when we take a trade from a client we immediately execute a back-to-back trade with a Central Counterparty Clearing house and move all or part of the client's margin capital to the Clearing House – this effectively transfers the client's credit exposure from us to the Clearing House. Client funds remain fully segregated from those of the firm, and those of the Clearing House, in accordance with FCA's client money rules. Client funds protection remains unchanged.
22. What types of account are available?
There are two options: an Individual Segregated Clearing Account (ISCA) or an Omnibus Segregated Clearing Account (OSCA). The majority of retail clients have an OSCA account. The primary difference between these two accounts is the nature of segregation. In both accounts client funds are fully segregated from assets of the firm and the clearing house, but in an OSCA account client funds are held with other retail client funds, while in an ISCA funds are held separately in your name only.
Omnibus Segregated Clearing Account (OSCA): This provides trading in centrally cleared markets and also allows trading in uncleared markets. Client funds are held with other retail client funds in a segregated account. This service is free of charge.
Individual Segregated Clearing Account (ISCA): Allows trading in centrally cleared markets through an ISCA. Your funds are held in a segregated account separately from other customer funds in your name only. There is a charge for this account.
23. Is there a charge for central clearing?
We provide central counterparty clearing through an Omnibus Segregated Clearing Account (OSCA) free of charge as standard to all clients.
If you wish to open an ISCA account, fees apply:
- For an individual these charges are: £13,000 account opening fee, plus account maintenance and transaction charges
- For a corporate entity these charges are: £200,000 account opening fee, plus account maintenance and transaction charges
24. 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 upon execution. 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.
25. How does the Italian Financial Transaction Tax affect my trading?
City Index complies with Italian law and we apply the Italian Financial Transaction Tax to all CFD trades on Italian Indices and Italian Equities where relevant. For more information on how this could affect your trading, please contact our Client Management team.
26. Financing on Non-Expiring Contract markets
Non-Expiring Commodity markets are subject to overnight financing on positions held overnight. See our Pricing pages for further information.
27. 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.
Speak to our friendly customer support team