Overnight InterestUser Manual | Symbol Guide | Specifications | Back-Up Quotes

Interest calculations are based on the differences between US interest rates (IR) and the IR of the corresponding country. The greater the difference between the pairs, the greater the IR payment fee will be. Refer to the "Interest" tab on the L4 Platform for a complete list of IR's

Interest Payments

Spot forex transactions are generally trades that must be settled in two business days. As an example, a trade opened and closed on Tuesday has a value date of Thursday. If, however, a position is opened on Tuesday and held overnight, the value date is now Friday.

One exception to this rule involves positions opened on Wednesday and held overnight. The standard value date would be Saturday in this example but because banks are generally closed on Saturday, the value date is the following Monday. Thus, positions held overnight on Wednesday incur or accrue an extra two days of rollover. A similar procedure applies to trades with a value date that coincides with a holiday. A trade executed on a Friday, when rolled over, would have a value date on Tuesday and incurs or accrues only one day of charges.

Clients can earn interest on rollover for positions in which they are long the currency pair with the higher interest rate differential. As an example, market interest rates in Australia are considerably higher than those in Japan. Thus, if a client buys, or goes long, the Australian dollar vs. the yen, he will earn interest at 5:00 p.m. EST/EDT. Conversely, if a client sells, or goes short, the Australian dollar vs. the yen, he will pay interest at 5:00 p.m. EST/EDT.

The short-term financial instrument used to calculate rollover charges is known as spot/ next swap points. Forex rollover charges are updated every day using the current swap points.