Imagine you’re trading in an account denominated in USD.
You have a long position of two contracts on Australia 200 – denominated in AU$ – which you decide to hold overnight, meaning that we make an overnight funding adjustment to your position.
At the time when overnight adjustments are applied, the Australia 200 is trading at 7,700. The long position overnight adjustment is -0.026%. The spot FX rate is 0.68373.
This would result in an overnight funding adjustment of -A$4.00 (ie 2 x 7700 x 0.026%). If there was no currency conversion fee, the spot rate would be used to convert this to USD, meaning $2.73 would be debited from your account (ie 4 x 0.68373).
However, with the currency conversion fee of 0.7% applied, the exchange rate used (the all-in rate) would be slightly less favourable. The charge incurred on the account would therefore be higher.
The all-in rate would be: 0.68373 x 1.007 = 0.68851. Meaning that the overnight adjustment made is -$2.75 (ie 4 x 0.68851).
| Currency conversion fee rate | Currency conversion cost | Overnight funding adjustment applied | |
| With no currency fee | 0% | $0 | -$2.73 |
| With the currency conversion rate | 0.7% | $0.02 | -$2.75 |