Home currency conversion fees

This topic is applicable only to v20 and v20 MT4 sub-accounts.

Trading products denominated in a currency that is different from your Account's Home currency will incur home currency conversion fees that reflect the cost of actual cash settlements.

We charge a fee equal to 1.0% of the relevant mid-market exchange rate at the time of conversion.

Home currency conversion fees are applicable when a trade/transaction is in an Instrument with a Quote currency other than your Account’s Home currency. Home currency conversion fees are applied to any realized profits and losses, adjustments, fees and charges that are denominated in a currency that differs from your Account’s Home currency.

You can see the currency conversion rates that have been applied to your cash balance postings to your Account in your Transaction History report. Home currency fees are located under the under the CONVERSION RATE column.

The following Formula and Example show how amounts are converted for settlement (aka cash posting) in your Account’s Home currency:

Formula

 

Mid Conversion price = (Top of Book BidClosedThe prevailing buy price. price + Top of Book AskClosedThe prevailing sell price. price) / 2

 

Bid Conversion Rate = Mid Conversion price * (1 - x%)

 

Ask Conversion Rate = Mid Conversion price * (1 + x%)

 

where x% = CurrencyClosedA medium of exchange for goods and services, often issued and regulated by a central authority. Conversion Fee (e.g., 1.0%)

Let’s assume you have an Account denominated in USD as the Home currency. You open a long position of 10,000 EUR/GBP at 0.88500 and close it at 0.89500. You generate a profit of 100 GBP.

Let’s assume the Top of Book GBP/USD prices are:

Bid Ask

1.29530

1.29550

To convert the 100 GBP of profit to USD, we need to use a GBP/USD exchange rate that includes the currency conversion fee applied for the settlement of actual cash amounts.

 

Mid Conversion price = (1.29530 + 1.29550) / 2 = 1.29540

 

Bid Conversion Rate = 1.29540 * (1 - 0.01) = 1.282446

 

Ask Conversion Rate = 1.29540 * (1 + 0.01) = 1.308354

 

In this case, the profit is a positive GBP amount that must be ‘sold’ to convert to a USD settled cash amount, so a Bid Conversion Rate is used (a loss would be a negative GBP amount that must be ‘bought’ to convert to a USD settled cash amount, so an Ask Conversion Rate would be used):

Profit in USD credited to your Account = 100 GBP * 1.282446 = 128.24 USD

If you had instead opened a short position of 10,000 EUR/GBP at 0.88500 and closed it at 0.89500, you would have generated a loss of 100 GBP. In which case, the loss in USD debited from your Account would have been 130.84 USD (= 100 GBP * 1.308354).

Let’s assume you have an Account denominated in GBP as the Home currency. You open a long position of 10,000 EUR/USD at 1.08500 and close it at 1.09500. You generate a profit of 100 USD.

Let’s assume the Top of Book GBP/USD prices are:

Bid Ask

1.29530

1.29550

 

Mid Conversion price = (1.29530 + 1.29550) / 2 = 1.29540

 

But, here we need an extra step compared to Example 1 because we need the number of USD units per 1 unit of GBP, not the number of USD units per 1 unit of GBP. So we need to invert the mid price from market quoting convention terms.

 

Mid Conversion price = 1 / 1.29540 = 0.771962328238382

 

Bid Conversion Rate = 0.771962328238382 * ( 1 - 0.01) = 0.764242704955998

 

Ask Conversion Rate = 0.771962328238382 * (1 + 0.01) = 0.779681951520766

 

In this case, the profit is a positive USD amount that must be ‘sold’ to convert to a GBP settled cash amount, so a Bid Conversion Rate is used (a loss would be a negative USD amount that must be ‘bought’ to convert to a GBP settled cash amount, so an Ask Conversion Rate would be used):

Profit in GBP credited to your Account = 100 USD * 0.764242704955998 = 76.42 GBP

If you had instead opened a short position of 10,000 EUR/USD at 1.08500 and closed it at 1.09500, you would have generated a loss of 100 USD. In which case, the loss in GBP debited from your Account would have been 77.97 GBP (= 100 USD * 0.779681951520766).