The FX spot market is used for immediate currency trades. The term spot refers to the standard settlement convention of two business days after the trade date (known as T+2)1. For example, a GBPUSD trade executed on a Monday will settle on a Wednesday (provided that there is not a public holiday in either country on the Wednesday, in which case the trade will be settled on the next available business day). The settlement period refers to the amount of time that is allotted to both parties in order to satisfy the trade’s obligations - the buyer must make the payment and the seller must deliver the security.
At Saxo, FX spot trades do not settle. Instead, open positions held at the end of a trading day (17.00 Eastern Standard Time) are rolled forward to the next available business day2.
The rollover is made up of two components; the tom/next swap points (Forward Price) and the financing of unrealised profit/loss (Financing Interest).
1 The standard settlement convention of T+2 is applicable for the majority of currency pairs; however there are exceptions to this rule e.g. USDCAD, which has a settlement convention of one day after the trade date (T+1).
2 The global market convention is that the value date rolls forward at 17.00 Eastern Standard Time, however there are exceptions to this rule e.g. NZDUSD, which rolls forward at 07.00 New Zealand Daylight Time
The swap points used are calculated using market swap prices from Tier-1 banks, plus/minus a mark-up corresponding to +/-0.45% of the Tom/Next interest swap rates.
Any unrealised profits or losses on positions that are rolled from one day to the next are subject to an interest credit or debit. The unrealised profit and loss is calculated as the difference between the opening price of a position (possibly corrected for previous Tom/Next rollovers) and the spot price, at the time that the rollover is performed between 07.00 and 09.00 GMT.
The rate is calculated based on daily market overnight interest rates plus/minus a mark-up corresponding to +/- 2.00%. The final rate is used to adjust the opening price of the position.
Historic swap points
In order to provide full transparency to clients, Saxo publishes the swap points used for the tom/next rollover once a day.
Forex is categorised as a red product as it is considered an investment product with a high complexity and a high risk.
Danish banks are required to categorise investment products offered to retail clients depending on the product’s complexity and risk as: green, yellow or red. For further information click here