CMC Markets now calculates rebates for high volume trades based on the highest rate you achieve in a month.
In case you were wondering if it’s worth it CMC Markets paid out £9.9m in rebates to it’s high volume clients in (the financial year) 2016/2017.
CFD and spread bet traders can earn rebates on FX, Indices and Commodities and the change means that once you cross the rebate threshold in one asset class, you are eligible for rebates on the others.
If you are not familiar with trading rebates, it is essentially away for large traders to reduce trading costs (or spreads) in the form of a cash credit to their account at the end of the month.
In most industries the more business you do the lower your costs, and trading is no different, but why do it through rebates, rather than just tightening the spreads?
Unlike, DMA (direct market access) trading where commission is added afterwards and set before hand, it’s quite a complicated procedure to have different spreads for different clients. To be honest, most broker spreads are pretty tight nowadays and in some cases are only fractionally wider than the underlying or futures market.
Also if spreads are tighten, then a client doesn’t do a certain amount of volume the broker losses out, as tighter spreads only becomes feasible once a certain threshold of volume has been traded.
If you’re a high volume trader, it’s worth considering a broker with a rebate scheme. You’d be surprised how much volume it is possible to trade without realising it.
Richard founded the Good Money Guide (previously Good Broker Guide) in 2015 and has been a broker for 20 years most recently at Investors Intelligence and previously a multi-asset derivatives broker at MF Global (Man Financial). Richard started his career working as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson) after interning on the NYMEX oil trading floor in New York and London IPE in 2001 & 2000.