FinancialSpreads.com are pleased to announce the launch of our Rolling Daily bets.

What are Rolling Daily Bets?
Rolling Daily Bets is the latest product to be launched by FinancialSpreads.com, providing a cost-effective solution for short-medium term trading. These new daily bets will not automatically expire at the end of the day, but will “rollover” into the next trading day. Any orders linked to Rolling Daily Bets will also be rolled. An overnight financing rate will be applied on a daily basis.

The standard benefits of spread betting still apply, such as the ability to go long or short and tax free profits, as well as other benefits.

Advantages

• Available on the indices, equities and Forex markets
• Familiarity of trading underlying market but with benefits of futures style trading
• Reduced rollover charges compared to previous rollover method
• A payment may be credited when short of certain index and equity products (generally, corresponding base rate minus 2%)
• Tighter spreads
• Cost-effective method for short-medium term positions
• Automatic order rollover facility

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Financing
Rolling Daily Bets will incur a charge or income for each day that they are held overnight. Please see the following information for further details. For a position held on a Friday or prior to a FinancialSpreads.com non-business day, financing will be applied according to the number of days until the subsequent FinancialSpreads.com business day. For example, for a position that is rolled from a Friday to a Monday, financing will be applied for 3 days. Any profits or losses incurred are not realised on rollover of Rolling Daily Bets.

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Rolling Shares and Indices

Financing

If you are long of a share/index contract, this equates to real market cash exposure and so interest may be charged on this cash value for each day that the position is held open overnight. If you are short of a share/index contract, an interest return may be paid on these equivalent cash funds.

How is the financing calculated?
The overnight financing for a rolling position can be calculated using this formula:

F = (p / u) x s x i)
                b

F = overnight financing
p = closing price
u = bet unit risk
s = stake
i = Relevant Funding Rate (RFR) + 2% (long bets) or – 2% (short bets)
b = day basis (365)

The Relevant Funding Rate (RFR) is generally equivalent to the base rate of the underlying currency of the country of the market concerned. Long rolling bets on shares / indices will be debited financing (RFR plus 2%). Short rolling bets on shares / indices will be credited financing (RFR minus 2%).

For example, the RFR for a short rolling daily bet on Google would be based upon the base rate (Fed Funds Rate) of the USA minus 2%.

The bet unit risk is the smallest movement on the relevant contract that equates to a profit (loss) change that is the same as your stake.

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Dividend adjustments
Dividend adjustments are credited to long positions and debited from short positions held at the close of business on the day before the ex-dividend date. If you are long, you will receive 80% of the dividend and if you are short you will be debited 100% of the dividend. Payment is credited / debited to your account on the ex-dividend date. Dividend adjustments may also apply to indices bets.

Example - A £10 LONG rolling bet on HBOS

A £10 long bet on HBOS which has a closing price of 750.10p would be equal to £7,501 market exposure (this equates your bet to the number of shares you would have to buy from your stockbroker to create the same market risk, a £10 bet equates to 1000 UK shares).

The bet unit risk for UK equities is 1 and the applicable interest rate may be calculated as RFR + 2% which might be 6.75% or 0.0675 (4.75% + 2%).

750.10p (price) / 1 (bet unit risk) = 750.1

750.1 x 10 (stake) x 0.0675 (RFR + 2%) = £506.32 (this would be the annual cost of borrowing £7,501 at 6.75%) and this is then divided by 365 to get the daily charge.

So, £506.32 / 365 = £1.39

Your account would be debited this amount as overnight financing.

US equities - A £10 LONG rolling bet on Microsoft with a closing price of $26.49

The bet unit risk for US equities is 0.01 and the applicable interest rate may be calculated approximately as the US Fed Funds rate plus 2%, which might be 4% or 0.04 (2% + 2%).
26.49 / 0.01 = 2649
2649 x 10 x 0.04 / 365 = £2.90

Your account would be debited £2.90 as overnight financing.

A £10 SHORT rolling bet on the FTSE Cash with a closing price of 4722

The bet unit risk is 1 and the applicable interest rate may be calculated roughly as the UK base rate minus 2%, which might be 2.75% or 0.0275 (4.75% – 2%).
4722 / 1 = 4722
4722 x 10 x 0.0275 / 365 = £3.56

Your account would be credited £3.56 as overnight financing.

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Rolling Daily Currencies

Relevant Funding Rate
The formula for Rolling Daily Currencies is the same as for shares and indices, the only difference is that the Relevant Funding Rate (RFR) is calculated somewhat differently.

To calculate the RFR of a currency pair, take the base rate of the second currency and subtract the base rate of the first currency. For example, the first currency in the currency pair GBP/USD is sterling and the second is the US dollar. Therefore, the corresponding RFR for GBP/USD may be calculated as follows: 2.0% (USD) minus 4.75% (GBP) = a negative interest rate of minus 2.75% or –0.0275.

Let’s assume the base rates are as follows: GBP (4.75%), EUR (2.0%) and (USD 2.0%). The RFR of the following currency pairs would therefore be calculated as:

Remember to add 2% to the RFR for long bets and minus 2% for short bets.

Bet Unit Risk
The bet unit risk is the smallest movement on the relevant contract that equates to a profit or loss change that is the same as your stake. For example, on GBP/USD a movement of 0.0001 in the price would mean a profit or loss shift on your bet of the full stake (bet) amount and so the bet unit risk would be 0.0001. Therefore, the bet unit risk for GBP/JPY would be 0.01 and for USD/CAD it would be 0.0001.

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Examples

A £10 LONG bet in GBP/USD that has a closing price of 1.8550

The bet unit risk is 0.0001 and the applicable interest rate for a long GBP/USD bet may be
–2.75% (RFR) plus 2.0%, which might be –0.75% or –0.0075 (–2.75% + 2%).

So, using the previous formula:

1.8550 / 0.0001 = 18550
18550 x 10 x – 0.0075 / 365 = –3.81

Your account would be credited £3.81 as overnight financing.

Normally, for a long (buy) bet you would be charged the overnight financing but because this calculation has returned a negative number, you will actually receive this amount.

A £10 SHORT bet in GBP/USD with a closing price of 1.8550

The bet unit risk is 0.0001 and the applicable interest rate for a short GBP/USD bet may be – 2.75% (RFR) minus 2.0%, which might be –4.75% or –0.0475 (– 2.75% – 2%).

So, using the previous formula:

1.8550 / 0.0001 = 18550
18550 x 10 x – 0.0475 / 365 = – 24.14

Your account would be debited £24.14 as overnight financing.

Please note that as with the previous example of a long bet, this has returned a negative number but in this case, because this is a sell bet, instead of you receiving the money you will be paying it!

• All rates correct at 25/11/04. All rates are determined by FinancialSpreads.com and can change on a daily basis.

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