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Examples: Debit & Credit Balance Calculations

 

Examples: Short Sale Proceeds Calculations

 

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How to Calculate Interest on: Short Sale Proceeds

 

Learn how to calculate interest that may be paid to you on Short Sale Proceeds along with other types of credit (positive) or debit (negative) cash balance that you plan to hold in your account. 

 

Interest Paid to You on Short Sale Cash Proceeds & Excess Cash, and Interest Charged to You on a Debit Balance

 

Interest Paid to You on Short Sale Proceeds

 

Interest Paid to You on Short Sale Cash Proceeds & Excess Cash in a Securities & Commodities1 Account

 

View Examples of Interest Paid or Charged to You on a Cash and Credit Balances

 

 

 

Example: Interest Paid to You on Short Sale Cash Proceeds & Excess Cash, and Interest Charged to You on a Debit Balance

In this example, you have securities short sale cash proceeds, and an Excess Cash (credit) balance in your Commodities account, but you also have a negative (debit) balance from borrowed cash.  We will charge you daily interest on the debit balance and pay you daily interest on the credit balance as follows:
       
For all below examples assume benchmark rates as follows:    
       
Benchmark (BM) Rate    
US Dollar Fed Funds Effective 1.00%    
EONIA (Euro Overnight Index Average) 2.08%    
GBP LIBOR (Overnight Rate) 4.44%    
       
Statement      
USD Securities Commodities Total
Short Sale Cash Proceeds 680,000 - 680,000
Borrowed Cash -180,000 - -180,000
Excess Cash - 120,000 120,000
Ending Settled Cash 500,000 120,000 620,000
       
Calculate interest on short stock value 680,000
Tier Balance Cash Interest Calculation
< 100,000 100,000 0 (100,000 x 0/360)
100,000 -1,000,000 580,000 0 [580,000 x (1.00%-1.35%)/360]
1M -3M 0 0  
> 3M 0 0  
Short credit interest received   $-  
       
Calculate interest on security account balance -180,000
Tier Balance Cash Interest Calculation
< 100,000 100,000 8.33 [100,000 x (1.00% + 2.00%)/360]
100,000 - 1,000,000 80,000 5.55 [80,000 x (1.00% + 1.50%)/360]
1M – 3M 0 0  
> 3M 0 0  
Debit interest charged   $13.88  
       
Calculate interest on commodity account balance 120,000
Tier Balance Cash Interest Calculation
< 10,000 10,000 0 (10,000 x 0/360)
10,000 - 100,000 90,000 1 [90,000 x (1.00%-0.60%)/360]
> 100,000 20,000 0.36 [20,000 x (1.00%-0.35%)/360]
Credit interest received   $1.36  
 

 Interest Calculations Examples

 

Example: Interest Paid to You on Short Sale Proceeds

When you sell stock short and receive cash proceeds, we'll pay you daily interest on those proceeds as follows:
       
Statement      
USD Securities Commodities Total
Short Sales Proceeds 1,500,000 0 1,500,000
Excess Cash 150,000 0 150,000
Ending Settled Cash 1,650,000 0 1,650,000
       
       
Calculate interest on short stock proceeds value 1,500,000
Tier Balance Cash Interest Calculation
< 100,000 100,000 0 No payment on balances < 100,000
100,000 - 1,000,000 900,000 0 [900,000 x (1.00%-1.35%)/360]
1,000,000 - 3,000,000 500,000 5.55 [500,000 x (1.00%-0.60%)/360]
Short credit interest received $5.55  
       
Calculate interest on security account excess cash balance 150,000
Tier Balance Cash Interest Calculation
< 10,000 10,000 0 (10,000 x 0/360)
10,000 - 100,000 90,000 1.00 [90,000 x (1.00%-0.60%)/360]
> 100,000 50,000 0.9 [50,000 x (1.00%-0.35%)/360]
Credit interest received $1.90  
 

  

Interest Calculations Examples

 

 

Example: Interest Paid to You on Short Sale Cash Proceeds & Excess Cash in a Securities & Commodities1 Account

For all below examples assume benchmark rates as follows:      
       
Benchmark (BM) Rate    
US Dollar Fed Funds Effective 1.00%    
EONIA (Euro Overnight Index Average) 2.08%    
GBP LIBOR (Overnight Rate) 4.44%    
       
       
Statement      
EUR Securities Commodities Total
Short Cash Proceeds 70,000 - 70,000
Excess Cash 5,000 25,000 30,000
Ending Settled Cash 75,000 25,000 100,000
       
Calculate interest on short stock value 70,000      
Tier Balance Cash Interest Calculation
< 80,000 70,000 0 (70,000 x 0/360)
> 80,000 0 0  
Short credit interest received   € -  
       
Calculate interest on security account balance 5,000
Tier Balance Cash Interest Calculation
< 8,000 5,000 0 (5,000 x 0/360)
8,000 - 80,000 0 0  
> 80,000 0 0  
Credit interest received € -  
       
Calculate interest on commodity account balance 25,000
Tier Balance Cash Interest Calculation
< 8,000 8,000 0 (8,000 x 0/360)
8,000 - 80,000 17,000 0.70 [17,000 x (2.08%-0.60%)/360]
> 80,000 0 0  
Credit interest received € 0.75  
 

1Please note that this information is for educational purposes only.  At the present time, Place Trade Financial, Inc. does not offer commodities trading to its clients.

 Interest Paid to You   Interest Charged to You 

 

Interest Charged to You on a Negative Cash Balance & Interest Paid to You on a Credit Balance

Interest Paid to You on Short Sales (Visit Examples Page)

Learn About Interest Rates (Basic)

 

 

What is a Short Sale?   Risks of Short Selling   How to Sell Short   Short Stock Buy-in Procedures   Exceptional Short Sale Regulations   Reg SHO

 

 

 

Interest Calculations Examples

 

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