Foreign Exchange (FX) Spreads and FX Swap Rates

Foreign Exchange (FX) Spreads

FX Swap Rates - FX Positions Held Until their Value Date

Spot FX positions held at the end of the business day before their Value Date will be rolled over to a new Value Date on a Tom/Next basis. As part of the rollover, positions are subject to a swap charge or credit based on the LIBOR/LIBID interest rates of the two traded currencies with an added notional markup.

Interest on Unrealised Profit/Loss
In addition to the FX swap charge or credit, an interest component of LIBOR/LIBID will be credited or debited at rollover for any unrealised profit or loss on the position.

These FX swap rates are for indication purposes only and may differ slightly from those applied to your FX trading account.

You can determine the swap rate for a particular product by logging into the MetaTrader 4 terminal and right clicking anywhere in on the Market Watch window and then clicking Symbols. Next select the product you wish to check from the list and then click Properties. You will find the swap rates for both long and short positions on the window that appears.

FX Interest Rollover - Financing your FX positions held overnight (known as interest rollover or "TomNext")

FX trading strategies involve the use of interest rate differentials between the currencies in a pair and those positions that are rolled over from one trading day to the next will incur financing based upon these interest rate differentials. You pay interest on the currency that you sell and receive interest on the currency that you buy.

The interest rate applied is 'TomNext' which is an abbreviation for 'Tomorrow' or the 'Next' business day because the first value date is tomorrow or the next business day. The TomNext price reflects the applicable interest rate between Tomorrow/Next and the "Spot value" date. At (22:00) 10:00pm Sydney Time (Standard FX market Value-Date change time) each day, AxiTrader settles all spot positions by closing the trade at the current market rate and re-opening it for the following day's spot date at a rate that will reflect the interest rate differential.

FX Example:
You are long the GBP/USD pair.
You will receive interest on the GBP and pay interest on the USD.
If GBP has a higher interest rate than the USD, you will receive a net interest payment but if GBP has a lower interest than the USD, you will pay out a net interest payment.