Negative Interest Rates

Why do we charge custody / negative interest fee?

This fee is charged to recover our costs associated with holding funds in a particular currency. It includes negative interest reference rates, which are set by central banks, such as the ECB for funds held in EUR. In addition to the negative interest rates, our mark-up over the reference rate includes certain additional cost components we have to consider, including any other costs such as ECB deposit facility rates passed on to Freemarket by its banking partners.

Normally, banks do not pass their costs on to their customers as they can use the deposit base for lending activities, but due to regulatory restrictions all funds held for payment service providers like Freemarket must be 100% liquid, and so these additional costs are charged to clients like Freemarket.

Thus, as an example, the ECB base reference rate for EUR is currently -0.5% and mark-up is -0.25%, giving a total negative interest rate of -0.75% per annum for EUR balances held on account.

Effective Dates: the new rates as set out in the table below are effective as follows:

New Clients:
    Corporate: 1 March 2022
    Consumer, Small Charity & Micro Enterprise): 1 March 2022
Existing Clients:
    Corporate: 1 April 2022
    Consumer, Small Charity & Micro Enterprise: 1 May 2022

CCY
Central Bank Deposit Rate*
Bank Mark-up
Total Interest Rate **
Day Count ***
EUR
-0.5
-0.25
-0.75
360

*As of the Effective Date and Subject to Change without notice.
**Total Interest Rate as of the Effective Date. The total interest rate is indicative only and subject to change without notice.
***Actual 360 is the method that calculates interest daily by counting the number of days in the calendar but uses a fixed 360 length.