Tom-next and the swap points hiding inside your rollover charge
Posted: Thu Oct 29, 2026 4:35 am
The swap charged or paid on a position held overnight is not set by the broker out of thin air. It comes from the forward market, specifically a trade called tomorrow-next, or tom-next. This is the cost of rolling a spot position from one settlement date to the following one.
Tom-next is driven by the interest rate difference between the two currencies, plus whatever funding stress exists that day. Brokers take the wholesale number, add a markup, and publish the result as the long and short swap.
That explains a few oddities. Swaps can change from one week to the next, even when central bank rates have not moved. They can spike near month-end and quarter-end, when funding gets tight. And they can look strangely asymmetric, with both the long and short side negative, because of the markup.
A scalper who holds trades for minutes can ignore all of this. A scalper who occasionally lets a trade run overnight should know that the figure on the platform is a live, changing price.
A simple way to see the relationship is to compare the swap on a pair at the start and end of a month, and note whether the change matches any central bank moves. Large unexplained jumps usually point to funding conditions or to a change in the broker's markup.
Has your broker's swap on a favourite pair ever jumped noticeably without any obvious reason?
Tom-next is driven by the interest rate difference between the two currencies, plus whatever funding stress exists that day. Brokers take the wholesale number, add a markup, and publish the result as the long and short swap.
That explains a few oddities. Swaps can change from one week to the next, even when central bank rates have not moved. They can spike near month-end and quarter-end, when funding gets tight. And they can look strangely asymmetric, with both the long and short side negative, because of the markup.
A scalper who holds trades for minutes can ignore all of this. A scalper who occasionally lets a trade run overnight should know that the figure on the platform is a live, changing price.
A simple way to see the relationship is to compare the swap on a pair at the start and end of a month, and note whether the change matches any central bank moves. Large unexplained jumps usually point to funding conditions or to a change in the broker's markup.
Has your broker's swap on a favourite pair ever jumped noticeably without any obvious reason?