The foreign exchange (FX) market is decentralised and predominantly executed over-the-counter (OTC). In the majority of spot FX positions, the trader is required to take delivery of his currency T+2 (settlement two days after the transaction date). However if a trader doesn’t want to take delivery of his position, then it is “rolled” into the next day. This occurs each day at 5pm ET (New York) and the positions are effectively closed and then reopened for the next trading day, allowing the trader to keep his position open.
This is required for traders who do not want to receive the currency they have entered into a transaction for to allow speculation or hedging. FX positions are transactions of borrowing one currency against another, which involves paying or receiving interest. The rollover refers to the action of the position being closed and simultaneously reopened in the next trading session, and debiting or crediting the relevant interest for the total position. This is the notional value of the leveraged position. i.e. 1 Lot = 100,000 of the base currency
Rollovers are also referred to as swaps, Sharia compliant trading is known as a “swap-free” trading account.
The Abshire-Smith direct market access accounts are subject to rollovers.
Weekends and Holidays: As positions are settled on a basis of T+2 (settlement two days after the transaction date) positions that are rolled over on a Wednesday evening are subject to three times the standard interest (both positive and negative) to take account that positions cannot be settled on Saturday or Sunday.
*For further details regarding trade volume and pricing please contact us.