Interest on Commodity Collateral

Discussion in 'Professional Trading' started by Ridu, May 5, 2008.

  1. Ridu


    Hi, I understand it's not the norm to receive interest on commodity cash collateral, however I just found my broker is charging me a 'negative interest' if my USD balance goes in the red, even when my positions are fully covered by my Euro base currency... (all surplus $ are converted to EUR at the beginning of every month, taking the $ balance flat, with any subsequent draw down leading to a 'negative $ interest charge')

    Is this the norm? Seems grossly unfair they are charging interest when the positions are fully covered by the EURO base currency, yet not paying any interest on this base currency!

    I'm extremely grateful for any replies before taking this up with my broker.

    Best regards,
  2. Ridu


    does anyone else have experience with this with their broker? I'd have though that if they are not paying interest on the euros, and if the negative $ balance is covered by the euro balance, then surely no interest should be payable on the $ deficit? or does it work differently in practice? very grateful for any comments
  3. is this the case when you have futures postions open or are totally flat?
  4. Ridu


    it's during the course of a month, where I have positions both open, and closed out for either a profit or a loss.
    last months $ cash balance was negative during the course of the month after a few loosing positions, with interest payment over $200 on the negative dollar balance, but more than ample funds in the euro balance (base currency).

    Does anyone know if they are entitled to charge interest in this way, and is this the norm?