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What are Forex Rollovers?
Normally the time of settlement for FX spot positions is expressed as T+2. So, if a trade is transacted on a certain day before the close of forex trading – 17.00 EST (New York time) is the standard time – settlement will be made two business days later.
Among traders physical settlement of currency is rare. So positions are ‘rolled over’ to a new value date on a tom/next basis daily and are subject to a swap charge or credit until closed out.
With any FX position that is held overnight debit or credit interest rates are reassessed to take account of the position being rolled over to a new Value Date. This operation, a “Tomorrow Next Rollover”, applies to open spot positions at 17:00 Eastern Standard Time (in New York) on any given trading day.
Two components are involved in the ‘rollover’: the tom/next swap points and financing of unrealised profits or losses.
The accumulated combined rollover credit or debit is added/deducted from the previous opening price of the position.
The Swap Points used are based on a Tom/Next swap feed from a Tier-1 bank with a mark-up corresponding to +/- 0.45% of daily market overnight interest rates, plus the interest component relating to unrealized profits or losses. See “Unrealised Profit and Loss” below).
Interest is credited or debited to any unrealised profits or losses on Forex spot positions that are rolled over from one day to the next. The interest credited/debited is added to the swap points when calculating the rollover credit or debit.
Unrealised profits or losses equate to the difference between the original traded rate (which may be adjusted for previous Tom/Next rollovers) and the end-of-day rate of the traded currency pair at 17:00 Eastern Standard Time (New York time).
Forex Rollovers Report
The Forex Rollovers report, see under the Account tab, displays the rollover history of your FX positions. It includes records of each FX position, as well as of the opening price, swap adjustment, value dates, resulting price, and other relevant information.
Rollovers do not apply to Intraday FX trading which positions settled at the end of the day.
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