Home currency conversion fees

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.

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).