Upcoming changes to interest rates effective 1 December 2021
From 1 December 2021, the Saxo Bank Group is changing the inputs used to set the interest rates that apply to deposited funds (account interest) and margin financing rates.
Why are we changing our interest rates?
Financial benchmark administrators are subject to increasing regulatory requirements. This impacts the Saxo Bank Group because we use financial benchmarks as a reference when setting interest rates.
Our changes follow the market’s general adoption of Alternative Reference Rates (ARRs) as a fallback rate and replacement for Interbank Offered Rates (IBOR’s). Publications of most London Interbank Offered Rate (LIBOR) settings will be discontinued by ICE Benchmark Administration from 31 December 2021.
ARRs have been developed by working groups consisting of national and international industry associations, market participants, as well as central and reserve banks.
They are publicly available and have been recognised by National Competent Authorities (NCAs), market participants, and national and international financial industry associations such International Swaps and Derivatives Association (ISDA).
What are the changes?
Alternative Reference Rates (ARRs) will be used as an input in setting Saxo Bid/Offer interest rates. Saxo Bid/Offer interest rates are used, in conjunction with commercial product markups and markdowns, to generate account interest or margin financing rates. For currencies without a designated ARR, money market rates, monetary policy rates or other relevant financial benchmarks will apply as an input.
The Saxo Bid/Offer interest rates are proprietary to the Saxo Bank Group and subject to the provisions in under General Terms.
For Offshore Chinese Yuan (CNH), the Saxo Bid/Offer interest rates applied for account interest will be floating going forward.
How does this affect you?
We don’t expect these changes to cause any significant impact to your overall costs at the time of conversion.
The current conditions that apply to positive cash balances and negative interest rates for the Danish kroner, euro and Swiss franc will remain unchanged.
You can find the full terms and conditions for account interest in the section Account Interest Rates below. Margin financing rates apply to Carrying Cost, CFD financing and margin lending.
Financial benchmarks from 1 December 2021
The financial benchmarks used to set Saxo Bid/Offer interest rates for account interest and margin financing rates from 1 December 2021 are listed in the below table.
Account interest rates are subject to a zero floor whenever negative, with the exception of positive cash balances in Swiss franc, Danish kroner and euros, which are subject to the conditions explained in the Account Interest section. All margin financing rates are subject to a zero floor whenever negative.
Saxo Bank Group reserves the right to apply a business lag to the publication of financial benchmarks when calculating and booking unrealised and realised interest.
Saxo Bank may vary interest rates and/or thresholds for interest calculation without notice when (i) the changes are to the Client's advantage, or (ii) the grounds for changes are due to external circumstances beyond Saxo Bank Groups control. Such circumstances include: i. Changes to significant particulars of the Client, based on which individual conditions were provided, occurs; ii. Changes in domestic and/or foreign monetary or credit policies that affect the general interest level; iii. Other changes in the general interest level, including in the money and bond markets; and/or iv. Changes in the relationship with Saxo Bank Groups liquidity providers, which affect Saxo Bank Groups cost structures.
Day count convention
Account interest rates *)
Margin financing rates *)
Central Bank of United Arab Emirates (CBUAE) repo rate
Australian Overnight Index Average (AONIA)
Canadian Overnight Repo Rate Average (CORRA)
Swiss National Bank (SNB) policy rate
Swiss Average Rate Overnight (SARON)
Chinese Offshore Yuan Hong Kong Interbank Offered Rate (CNH HIBOR)
Czech Overnight Index Average (CZEONIA)
Danmarks Nationalbank current-account rate
European Central Bank (ECB) deposit facility rate
Euro Short-Term Rate (ESTR)
Sterling Overnight Index Average (SONIA)
Hong Kong Overnight Index Average (HONIA)
Hungarian Overnight Index Average (HUFONIA)
Bank of Israel (BoI) rate
Tokyo Overnight Average Rate (TONAR)
The Equilibrium Interest Rate (TIIE) Overnight
Norwegian Overnight Weighted Average (NOWA)
Reserve Bank of New Zealand (RBNZ) Official Cash Rate (OCR)
Poland Overnight Index Average (POLONIA)
National Bank of Romania deposit rate
Ruble Overnight Index Average (RUONIA)
Central Bank of Saudi Arabia (SAMA) reverse repo rate
Swedish Short-Term Rate (SWESTR) **)
Singapore Overnight Rate Average (SORA)
Thai Overnight Rate (THOR)
Turkish Lira Reference Rate (TLREF)
Secured Overnight Financing Rate (SOFR)
South Africa Benchmark Overnight Rate (SABOR)
*) Applicable financial benchmarks as an input in setting Saxo Bid/Offer interest rates for account interest and margin financing rates respectively.
**) Subject to final release by Sveriges Riksbank by 2 September 2021. In the case that the testing period for the financial benchmark Swedish Short-Term Rate (SWESTR) is not completed by 1 December 2021, the Sveriges Riksbank repo rate will apply as an input instead.
Interest on funds deposited with Saxo Bank
Interest on your main account is calculated on the Net Free Equity.
Interest on sub-accounts is calculated on the Account Value.
Since the Net Free Equity is calculated on open trade positions on all your accounts, it is important to make sure that sufficient cash is available on your main account.
Otherwise, you risk being subject to a debit interest on your main account exceeding the credit interest payable on your sub-account(s).
Net Free Equity Definition
Your Net Free Equity is:
- The value dated cash balance of your main trading account
- Plus or minus any unrealised profits or losses from open CFDs, FX Forwards and Futures on your main trading account
- Plus the market value of any FX Options on your main trading account
- Minus any margin required for financing open positions on your main trading account and sub-accounts
Net Free Equity Margin Financing
Cash collateral for Net Free Equity margin financing may differ from the trading margin requirement. See the full list of cash collateral for margin financing used for Net Free Equity calculation under our General Business Terms, located here.
To avoid paying interest on your account you are required to hold sufficient cash collateral ensuring a positive Net Free Equity Balance.
The trading margin requirement (leverage) described under each trading product is the minimum amount of collateral you must maintain on your account at all times. This collateral may be in the form of cash or stocks, ETFs and Bonds after applicable haircuts.
Interest Calculation and Settlement
Interest will be calculated daily and settled monthly - within seven business days after the end of each calendar month.
Account Value definition
Account Value of your sub-account is:
- The value cash balance of the account
- Plus or minus the value of any unrealised profits or losses from open CFDs, FX Forwards and Futures on the account
- Plus the market value of any FX Options on the account
The following interest rates apply to funds deposited with Saxo Bank
For positive Net Free Equity or Account Value, the interest will be the highest of either: the market bid rates minus the markdown of 1.5% or zero. Interest will be paid on the full amount for Net Free Equity or Account Value.
For deposits in currencies with negative interest rates
Saxo Bank charges negative interests aligned with central bank rates. The charge applies to balances above the thresholds indicated in the table below. The interest rates applied by the central banks are continuously monitored by Saxo Bank. If a rate is changed, Saxo will adjust its negative interest rates accordingly with effect from the start of the next month.
The thresholds and interest rates are:
|CHF||100,000 ||-0.75% |
On the main trading account, this threshold will be applied to the available net free equity and, in the case of sub-accounts to the account value. The negative interest will be calculated daily for the account credit balance exceeding the threshold and debited to the main trading accounts or sub-accounts at the end of each month for the interest period of the previous month (value date is the last day of the previous month).
The following interest rates apply to negative Net Free Equity or Account Value
For negative Net Free Equity or Account Value, interest will be market ask rates plus a mark-up of 4%, however never less than the mark-up. Interest will be charged on the full amount for all Account Values/Net Free Equity.
Currency Conversion fee
Currency conversions of trading costs as well as profits and losses from trading activities are done using the prevailing mid-spread close rate as of 17:00 New York time, plus/minus 0.5%. For FX Options the rate is plus/minus 0.1%.
The Currency Conversion fee does not apply to margin collateral. Only settlement of actual payments to or from the trading account is included, for example, buying/selling cash Stocks, paying/receiving options premium etc.
The rate used for currency conversion of amounts booked to your account is shown in the trading platforms under the "Trades Executed" report.