If you carry a CFD share position overnight, it will incur a financing cost or benefit. Finance will be on 100% of the value of the equivalent physical position. If you are long, you may have to pay interest to CMC Group; if you are short, you may receive interest from CMC Group.
How to calculate the finance rate using a share CFD example
Long Position
You wish to buy a 2,000 share CFDs at $5.00 and decide to hold the position overnight 2000 x $5.00 = A$10,000.00 - this is the value of the position You are then charged interest at the official overnight cash rate +2.0% - a highly competitive premium for a leveraged product This is then multiplied by your total market exposure, and then divided by 365 days in the year to give your daily overnight rate
5.25%* + 2.0%** = 7.25% A$10,000 x 7.25% = A$725 $725/365 = A$1.99 will be debited from your trading account for every night you hold this position Although a broker will not charge you financing, your outlay will be 100% of the value of the trade (A$10,000) which is A$9,000 more than required to hold the same position with CMC Group. Therefore by holding this position with your broker you lose out on the daily interest you could have received from A$9,000 as free equity with CMC.
Short Position
You wish to sell 2000 Telstra share CFDs at $5.00 and decide to hold the position overnight 2000 x $5.00 = A$10,000.00 - this is the value of the position You are then credited an amount calculated by using the official overnight cash rate less 2.0% - a typical adjustment for a leveraged product This is then multiplied by your total market exposure, and then divided by 365 days in the year to determine the daily overnight rate paid to you
5.25%* - 2.0%** = 3.25% A$10,000 x 3.25% = A$325 A$325/365 = A$0.89 will be credited to your trading account for every night you hold this position.
