RBS’ biggest trading customers face negative rates

[NigelJK]

BoE rate = .25% (not good but not negative)
EU Central bank = -.4%

[BrilloPad]

"futures are entered into by sophisticated financial investors looking to hedge risk"

So like gambling with someone else's money then?

I am sure they said that in the 1980s about Lloyds Insurance. Fantastic - you pledged your money and got a return. That ended well.

[original PM]

"futures are entered into by sophisticated financial investors looking to hedge risk"

So like gambling with someone else's money then?

[darmstadt]

That would be the EU Central bank then. Good shout, get out NOW!.

I think you'll find that they mean the BoE...

The primary function of a central bank is to control the nation's money supply...

[NigelJK]

as central banks’ sub-zero policies start to bite.

That would be the EU Central bank then. Good shout, get out NOW!.

[AtW]

[DimPrawn]

They should be buying ex-council flats in London overnight and then selling them again in the morning. Sorted.

[AtW]

Royal Bank of Scotland will impose negative interest rates on some of its biggest customers from Monday, as central banks’ sub-zero policies start to bite.

The 70 largest companies which are heavily involved in financial trading, including other banks and pension funds, will face the charge when trading options and futures.

Traders have to post collateral with clearing houses – funds which cover the cost of transactions if the trader is unable to pay the bills.

If the institutions put cash on deposit as collateral, they will now face a negative charge.

RBS argues that this is a fee imposed on the bank by the clearing houses, and it is only now deciding to pass it on to customers.

It applies in euros, sterling and other currencies.

"Until recently, RBS has applied a 0pc floor to the overnight rate charged for deposits required by clearing houses for futures trades," the bank said.

"However, due to the sustained low interest rate environment, RBS will now be passing the cost of holding such deposits onto a limited number of our institutional clients. Futures are entered into by sophisticated financial investors looking to hedge risk."

RBS’ biggest trading customers face negative rates