What is the CFD financing cost?
At Friedberg Direct, the financing cost for your CFD trade is referred to as ‘rollover.' This is the interest paid for holding a position past 5 PM EST and is based on the size of the position. For Index CFDs, any dividend adjustments issued are included in the rollover amount as well. The formula for financing cost is as follows:
[Closing Price of the Index * [(the relevant 1-month LIBOR rate/100) +- Friedberg Direct’s Markup]/Number of Days] +- Dividends * Trade Size
Note that the financing markup for long positions on CFDs is +3% and for short positions is -3% for US Libor instruments and -2.5% for other instruments.
To account for holding a position into the weekend, there is a 3X rollover on Wednesdays for XAU/USD and XAG/USD and 3X rollover on Fridays for other CFD products. Additionally there is no rollover on holidays, but an extra days’ worth of rollover before the holiday.
To avoid rollover, you can close your position before 5PM EST and the charge would not apply.