We have all seen numerous FX brokerage companies desperately trying to attract new clients by luring them with all sorts of welcome bonuses. Usually it’s a monetary bonus but we’ve seen brokers offering anything from formula one tickets to sports cars to a small yacht! Now we don’t want to spoil the dreams of anyone out there but the simple truth is, no one actually ever receives that 5000 USD bonus or that brand new Maserati. There are always clauses that prevent the account holder from ever actually profiting from what’s being offered.
At Liquid Markets we like to deal with reality, facts and not fiction, and we do not think that making empty promises is the right way to start off a business relationship with any client.
Instead of a bonus, which you will never receive, Liquid Markets will pay interest on your account balance, every single day. We’ll pay you the base currency interest rate even if you don’t trade on your account (a LIBOR proxy interest rate), but if you do trade you’ll receive a much higher interest rate, in fact, the more you trade the higher the rate all the way to LIBOR +9%. Additionally, even the margin you’re using to trade is paid interest on, so even if you have open positions, you’ll still receive the associated interest payment on the margin you’re using.
As opposed to any bonus scheme, there are no strings attached, you can withdraw your interest payment at any time, at a moment’s notice.
As a financial markets participant, we want to provide you with a true interbank money markets environment. In that respect, we are offering daily deposit interest rates based on your cash equity and your day-to-day volume.
We use internationally recognized benchmarks on daily deposits as a basis for determining interest rates. We then apply a “reward” rate in addition to the benchmark interest rate, where larger volume makers receive increasingly better rates to determine an effective rate.
Furthermore, we conform to the international standards for day counting in which deposit rates for most currencies are expressed in terms of a 360 day year. However, we take into account the operational trading days only, which drastically favours the investor for the effective interest rates’ calculation.
Effective Interest Rate = End-of-Day Free Cash Equity * (Account Base Currency Benchmark Rate + Reward Rate) / 360 day year (Standard day-count convention)
An investor has a 100,000 USD cash equity available in his USD denominated trading account and the benchmark rate on USD is currently at 0.12%.
At end-of-day, 5,300,000 USD or equivalent has been traded through the account, which generates a daily volume ratio of 53 (5,300,000/100,000=53). This daily volume ratio offers a 5% reward rate to the investor.
Daily Effective Interest Rate = 100,000 * (0.0012+0.05)/360 = 14.22 USD
An investor has a 23,725,000 HUF (or 100,000 USD) cash equity available in his HUF denominated trading account and the benchmark rate on HUF is currently at 3.20%.
At end-of-day, 2,600,000 USD or equivalent has been traded through the account, which generates a daily volume ratio of 26 (2,600,000/100,000=26). This daily volume ratio offers a 2.5% reward rate to the investor.
Daily Effective Interest Rate = 23,725,000 HUF * (0.032+0.025)/360 = 3,756.46 HUF (or 15.83 USD)
Please note: Interest on deposit payments is not available on Islamic and cTrader accounts.
|Ratio 0 - 15||Ratio 15 - 30||Ratio 30 - 50||Ratio > 50|
|Libor Proxy||Reward Rate : 0%||Reward Rate : 1%||Reward Rate : 2.5%||Reward Rate : 5%|
A volume weighted average rate based on all the transactions between member banks going through the Fed Reserve. It is used as a gauge for interbank financing activity for Federal Reserve members and is closely related to short-term interest rates in the broader market.
Libor stands for London Inter-Bank Offered Rate and is the average interbank interest rate at which a selection of banks on the London money market are prepared to lend to one another. The LIBOR is monitored closely by market professionals as it is one of the most commonly used base rates for short term interest rates.
EONIA stands for Euro Overnight Index Average and is the weighted average of overnight euro interbank offer rates for interbank loans. The European Central Bank calculates the EONIA daily and is the standard interest rate for euro currency deposits
STIBOR, which stands for Stockholm Interbank Offered Rate, is Sweden’s official offer rate for short-term loans. These short-term loans are for less than one year in maturity.