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Step 1: At the end of every day, Bulbrokers looks at the following balances in each currency:
These balances are reported on the Daily Activity Statement with the heading “Ending Settled Cash”.
Step 2:
Bulbrokers collects the overnight reference interest rate that will serve as the benchmark (“BM”) on which subsequent calculations are made. For more information about these benchmarks see Tabl 1.
Step 3:
Bulbrokers calculates an Adjusted Cash Balance for the security sub-account by subtracting the short stock value from the security sub-account “Ending Settled Cash”. Essentially, this pulls out funds derived from sales proceeds on short stock since they are calculated using different tiers.
AdjustedCash = EndingSettledCash - ShortStockValue
Step 4:
For each of the 3 adjusted balances (futures, adjusted security, short stock), we calculate how much money should be applied to each rate tier (see Tabl 2). Finally, we calculate the interest using the applicable rates (see Tabl 2):
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Interest = |
( Balance tier1 * Rate tier1 / numberOfDaysInYear ) + |
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( Balance tier2 * Rate tier2 / numberOfDaysInYear ) + |
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( Balance tier3 * Rate tier3 / numberOfDaysInYear ) + |
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etc. | |
The numberOfDaysInYear are based on industry standards for money market activity.
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365: GBP, HKD, KRW
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360: USD, CAD, EUR, CHF, JPY, AUD, SEK, NOK
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