Commodities - Market Information

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Spot Gold and Spot Silver Funding

Our funding rate for Spot Gold and Spot Silver consists of two parts: the Tom-Next rate for that market and an admin fee (3.5% annualised). The charge is applied at 10pm every weekday.

The formula describes the charge, so a positive number means you’re debited (pay funds) and a negative number means you’re credited (receive funds).

For long positions:

You pay the Tom-Next rate therefore it is added to the charge.

For short positions:

You receive the Tom-Next rate therefore it is subtracted from the charge (treat stake as a positive number).

TradePer = What we define 1 point to mean in terms of the visible price, this can be found in the Market Information section next to the displayed price on the platform.

Stake = Account currency unit per point.

Price = Price of commodity at 10pm

TomNextRate = Overnight fee/credit to keep your position open without settling.

The formula can be broken down to essentially two components. One is the TomNextRate component which is found by multiplying the rate by the stake and scaling it by TraderPer to convert to points. The second component is the Spreadex admin fee which is found by multiplying the notional of the position (stake*(price/TradePer)) by the daily admin fee (hence the division by 360). 

For example, suppose we have the following situation:

Your daily funding charge breakdown would be:
Tom-Next component = (0.237 /0.1) * 1 = £2.37

Admin fee = [(1810*0.035/360)/0.1] *1 = £1.76

Total Funding Charge = £2.37 + £1.76 = £4.13

Note, here, you are paying (account debit) the Tom Next rate, if your position was the opposing direction you would receive (account credit) the Tom Next rate, in either case you would always pay the Spreadex admin charge. Also note that on a Wednesday, the Tom-Next component is multiplied by 3 and one day of admin fee applies. On a Friday, one day of Tom-Next applies and the Spreadex admin fee component is multiplied by 3. (See below for more details)

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SPot energies and spot softs funding

If you hold a spot energy or spot soft commodity position through 10pm (UK time) on a weekday, a funding adjustment will be applied to your account. This adjustment has two components:

1. Daily basis adjustment — reflects the daily movement of the spot price along the futures curve. This is not a separate charge. It is a market adjustment that is typically offset by the corresponding movement in the spot price. It can be a debit or a credit depending on the direction of your trade and the relationship between the two underlying futures contracts.
   
   
2. Admin fee (3.5% annualised) — applied daily, this is the cost of holding your position overnight. It is always a debit, regardless of the direction of your trade.

On Fridays, the funding adjustment covers three days (Friday, Saturday and Sunday), so both components will be three times the usual daily amount.

The formulas below are shown for transparency — you don't need to calculate this yourself. A positive result means you are debited (pay funds). A negative result means you are credited (receive funds).

If long:

Daily Funding Rate = Daily Basis Adjustment + Admin Fee Rate

If short:

Daily Funding Rate = Admin Fee Rate − Daily Basis Adjustment

Your funding charge or credit = Daily Funding Rate × Stake

Where:

Daily Basis Adjustment = (Next Future Price − Front Future Price) / (TradePer × Days Between Contracts)

• Front Future Price = price of the nearest futures contract at 10pm
• Next Future Price = price of the following futures contract at 10pm
• TradePer = what we define 1 point to mean in terms of the visible price (shown in the Market Information section on the platform)
• Days Between Contracts = the number of days over which the price transitions from one contract to the next (i.e. the number of days between successive contract expiries)

Admin Fee Rate = (Spot Mid Price × 0.035) / (TradePer × Days in Year)

• Spot Mid Price = closing mid-price of the spot market at 10pm
• Days in Year = 360

Worked example

Suppose it is 30/03 and you hold a short position of £2/pt in Spot Brent Crude. At 10pm the market looks like this:

Step 1 — Daily Basis Adjustment:

Days Between Contracts = 30/03 − 27/02 = 32 days

Daily Basis Adjustment = (8207 − 8236) / (1 × 32) = −0.90625

The result is negative because the next contract is priced lower than the front contract. For a short position, a negative basis adjustment results in a debit (the formula subtracts a negative, making it a positive charge).

Step 2 — Admin Fee Rate:

Admin Fee Rate = (8240 × 0.035) / (1 × 360) = 0.801

Step 3 — Apply the short formula:

Daily Funding Rate = 0.801 − (−0.90625) = 1.70725

Daily Funding Charge = 1.70725 × £2 = £3.41 debit

Breakdown:

In this example, the front contract (8236) is priced higher than the next contract (8207), so the spot price drifts lower each day. As a short position holder, you benefit from this downward drift in the spot price. The £1.81 basis adjustment debit offsets that corresponding price movement. The actual cost of holding this position overnight is the admin fee of £1.60.

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Tomorrow-Next (Tom-Next) Rates

The Tom-Next rate for a given market is the rate you must pay to roll a position (i.e. stop your position being closed tomorrow and keep it open until the next day). We utilise it in some of our funding charge formulas. The rate itself is determined by banks and the market.

For example, if you buy Spot Gold in the official markets (rather than just placing a bet on its price like you do with us), then this trade will usually settle T+2, meaning that (loosely speaking) two working days after the trade date, you will be locked into having gold delivered.

Suppose you bought Spot Gold on Monday, and it’s now Tuesday. As it stands, you have gold being delivered tomorrow (Wednesday), but if you don’t want to take this delivery tomorrow and would rather keep the position open, then you can roll it at whatever the prevailing Tom-Next rate is. From the perspective that it is now Tuesday, rolling the position once via Tom-Next rates extends the settlement date by one day to Thursday.

how to 

go long and short in the same market

You are able to open a trade in the opposing direction to an existing trade in the same market, this is called a forced open trade. Rather than your positions netting off, you would now have open positions both long and short.

Forced open trades can be opened by placing a trade at the live available price or alternatively by adding an order to open at a different price, should the price subsequently move to the level of your order your forced open trade will be opened.

Forced open trades can be executed by ticking the forced open position on the deal ticket, you can also update your settings so the default setting is for forced open to always be selected.

It is important to note that placing forced open trades will result in increased costs. If you have forced open positions open overnight, the funding adjustments will be applied to all positions open and will lead to increased funding costs. These costs can be avoided by not placing forced open trades and just allowing your positions to net off eg. £10 long position and £10 short position = no net overall exposure.

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Gold

Gold has always been a symbol of wealth due to its look and rarity and is by far the most popular of the precious metals when it comes to investment, trading or financial spread betting.

Gold futures are primarily traded on the New York Commodities Exchange (COMEX), a subsidiary of the CME Group (Chicago Mercantile Exchange). Its price is quoted in US dollars per ounce.

Gold is renowned for holding its value and is regarded as a safe haven for investors to turn towards to diversify their portfolio and offer protection during times of economic uncertainty.

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Light crude

Oil is one of the world’s most critical and valuable natural resources, with the price of the commodity affecting consumers every day by influencing the cost of certain goods and affecting heating, petrol or gasoline prices.

Crude oil is the world’s most actively traded commodity and the two most heavily traded contracts on crude oil are the Brent Crude Oil contract and the West Texas Intermediate (WTI) Light Sweet Crude Oil contract.

WTI Light Crude oil is crude oil of a very high quality, mainly refined in the Midwest and Gulf Coast region of the United States. It is considered the major benchmark of crude oil in the Americas.

Futures contracts of WTI Crude Oil are traded on both the InterContinental Exchange (ICE) and New York Mercantile Exchange (NYMEX) and in Dubai by the Dubai Gold and Commodities Exchange. Light Crude futures are traded in units of 1,000 US barrels (42,000 gallons) with prices quoted in US dollars.

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copper

Copper is a primary industrial metal used mainly in construction. Just like gold and silver, copper can also be traded on the financial markets with futures prices often considered an accurate barometer of economic growth.

Copper futures are primarily traded on the New York Commodities Exchange (COMEX), a subsidiary of the CME Group (Chicago Mercantile Exchange), and its price is quoted in US cents per pound. Although not as heavily traded or as valued as gold, copper is 100% recyclable and has hit close to record highs in recent years making it a target for theft either from underground communication cables or derelict buildings.

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Platinum

Platinum and palladium are the most widely used of the six platinum group metals, which also include rhodium, ruthenium, osmium and iridium. They are used in manufacturing processes in a range of industries due to their catalytic functions, conductivity and resistance to corrosion.

Platinum has more industrial uses than gold and silver combined and is also used in jewellery – where it is known as white gold – because of its resistance to wear and tarnishing.

Platinum futures are primarily traded on the New York Commodities Exchange (COMEX), a subsidiary of the CME Group (Chicago Mercantile Exchange), and its price is quoted in US dollars per troy ounce.

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cocoa

Cocoa is used in a variety of culinary applications and is derived from the cacao tree. Much of cocoa comes from West Africa and part from South America, where it was even once used as a form of currency.

Cocoa is the world’s smallest soft commodity market and is traded predominantly on the InterContinentalExchange (ICE). Cocoa prices are quoted in US dollars per metric ton.

When spread betting on cocoa you trade per dollar movement. Price movements can sometimes be volatile with up to 100 point movements per day occurring with regularity.

When spread betting on cocoa it is worth considering several major influences on the price such as the prevalence of disease, which can destroy cocoa crops, political instability in cocoa growing countries within West Africa or South America and the demand of cocoa by other countries around the world.

As cocoa’s price is quoted in US dollars, any fluctuations in the value of the American currency can also influence the price of cocoa.

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soyabeans

Soyabeans are used as protein feed for livestock, as a meat-alternative and in other products such oils. The US is a major producer of soyabeans, along with Brazil and Argentina.

Soyabean futures are primarily traded on the Chicago Board of Trade (CBOT), a subsidiary of the CME Group (Chicago Mercantile Exchange), with prices quoted in cents per bushel.

When spread betting on soyabeans take care to consider several major influences which can affect the price. Disease such as soyabean rust can damage crops, and weather can have major consequences on the size of the crops. Demand in the future may be spurned further by an increasing reliance on bio fuels, such as that produced from the soyabean. As soyabean’s price is quoted in US dollars, any fluctuations in the value of the American currency can also influence the price of soyabeans.

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wheat

Wheat is used in a variety of ways to produce livestock feed and various different foodstuffs from biscuits to flour. It is also used to distil alcohol. The biggest wheat producer is China, but Russia, Canada and the US produce sizable amounts.

Wheat futures are primarily traded on the Chicago Board of Trade (CBOT), a subsidiary of the CME Group (Chicago Mercantile Exchange), with prices quoted in cents per bushel.

When spread betting on wheat there are several major influences to consider which may affect the price. These would include the demand for biofuels, the availability and price of substitute products (especially when it comes to livestock pricing) and any diseases which could damage crops. As wheat’s price is quoted in US dollars, any fluctuations in the value of the American currency can also influence the price of wheat.