Value Dates, T+1 Exceptions and the Triple Swap Wednesday

[Shadow Trader]

A spot FX trade does not settle immediately. Most pairs settle two business days after the trade date, known as T+2. The count excludes weekends and any day that is a banking holiday in either currency involved.

USD/CAD is the best known exception, settling the next business day, or T+1. Its short settlement cycle reflects the close integration of the two economies and time zones. Some other currency pairs have had their own conventions historically, which is why a dealing platform usually shows the value date next to each quote.

Holidays create awkward effects. A national holiday in one country can push the value date of every pair containing that currency, which sometimes produces unusually long gaps between trade and settlement. Dollar holidays matter for nearly everything because the dollar sits on one side of most trades.

This explains the triple rollover many retail brokers apply on Wednesdays. A position held at the daily cutoff on Wednesday has a value date that shifts from Friday to the following Monday, so three days of swap accrue at once. Scalpers who close within minutes rarely notice. Anyone holding through the cutoff should check the calendar and broker conditions, since holiday weeks can alter the charge.