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Rollover
Rollover - At the end of each business day, Trading System will automatically rollover or swap, all existing open positions into the next spot date. The mechanics in effect involve the simultaneous close of an existing position and the opening of a new spot position. Trading System will debit or credit the client’s account depending on the interest rate differential between the base currency and the counter currency and the direction of the client’s position. For example, if the client is long a currency pair where the overnight rate for the base currency is higher than the counter currency, the client will earn a small credit for positions held overnight. If the opposite is true, the client account will be debited for the difference in the interest rate differential. The fundamental reason is if a client is long a higher yielding currency, he should benefit from being able to invest and earn a higher return overnight than what he has to pay for being short the lower yielding currency.
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