Why is swap tripled on Wednesday and not Friday ?
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Wątek: Why is swap tripled on Wednesday and not Friday ?

  1. #1
    Wouldn't it make more sense to triple the swap on Friday when its obvious that if you hold the position to Friday close you have to carry it over the weekend. Just seems to me like a way for them to gouge us since most people don't carry positions over the weekend and this way they can make the money off us anyway. I realize swap is minimal but for them multiply it x number of times and its quite the money maker I'm sure, especially since the net swap is to our disadvantage. Or am I missing something. This just struck me as odd and wondered if anyone had any details why this is done this way. thx, just thought I'd vent a little today

  2. #2
    The reason you get 3x the interest on wednesday is that the spot forex market is a 3 day settlement so you pick up the weekend interest.

  3. #3
    A spot currency contract is the equivelant of a 2 day futures contract. This means that if rollover didn't seamlessly occur you would you have to sell(buy) your existing contract and buy(sell) your new contract every 2 days or face delivery of a big pile of money. Rollovers generally occur around 5 pm EST because that is consdiered the end of the US session and the beginning of the Asian session. Triple interest is paid on wednesday at 5 PM EST because it covers the weekend markets when brokerages and banks are not open. Friday at 5 PM is two days later than Wednesday. This offsets the trades that would have occurred on the weekend.

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