FX and spot metals funding
A tom-next rather than an interbank rate is used in the calculation of funding costs for forex and spot metals.
Tom-next is the day’s market swap rate for that pair or metal.
Example tom-next rate: -1.39/-0.39.
-0.39 would be used to calculate the funding cost on a long position.
-1.39 would be used to calculate the funding cost on a short position.
Size x (tom-next rate + admin fee)
Size means total value of lots (number of lots x value per lot)
Tom-next is the day’s market swap rate for that pair or metal
Admin fee is no more than 0.5% per annum (0.8% for mini contracts)
FX settlement of T+2 means that if you hold your trade past 10pm Wednesday (London Time) then you’ll need to incorporate the weekend into the calculation, and therefore you will have a three-day funding charge. This is because currency cannot settle during the weekend, and the new spot rate would therefore fall on a Monday.
FX settlement also cannot take place on public holidays. Therefore, you may see interest charges for a variable number of days if you hold your trade past these public holidays.
For example, if Friday is a public holiday, this means that if you hold your trade past 10pm on Tuesday (London Time), there will be a four-day funding charge instead of a one-day funding charge.