Rollover

Rollover Strategy

Competitive swap rates

Clear rollover policy

Respond at current interest rates

Rollover Policy

The debit and credit records of SVOFX at client accounts, for all the positions opened after GMT 22:00, the rollover interests are handled based on rollover rate of bidding price.

There is no rollover when the market is closed on Saturdays and Sundays, but the bank would calculate interest over the positions opened on weekends. In order to equalize such time difference, SVO will apply to the rollover strategy of 3 days on Wednesday.

Rollover

For traders, rollover means reaching agreement through the sacrificed SWAP contract. SVO is not re-opening after settling position, but having debit/credit transaction (with markup LIBOR/LIBID) on the account with position opened for one night based on current interest.

However, in margin transaction, there is no actual delivery. Therefore, all open positions need to be settled by the end of transaction in every 1 day (22:00 GMT), and re-opened on the next trading day. This extends transaction by another 1 trading day. This strategy is referred to as rollover.

Calculation of rollover

Rollover means the process of extending the settlement date of open position (meaning the date when the already agreed transactions must be settled). 2 working days are needed for foreign exchange market to settle all spot transactions. This means the physical delivery of currency.

The basis of all currency transaction is that in order to purchase other currency, borrow 1 currency. Pay interest through the already borrowed currency, earn interest through the already purchased currency. For example, the interests of Japan and US are respectively 0.25%pa and 2.5%pa, assuming holding 118.50USDJPY of one hand of buyer’s position, you can obtain the USD and the income of 2.5% per year calculated in USD. For the already borrowed JPY, pay the interest of 0.25% per year.

To sum up, the open position can receive USD6.16 per day [100,000*(2.5% – 0.25%)/365]. Similarly, if holding short position of USDJPY, there will be loss of USD6.16 per day. In this way, the rollover interest can provide you with additional interest of loss coverage.

Appointment of rollover

22:00 GMT is considered as the beginning and end of FX trading day. All positions that haven’t been opened at 22:00GMT shall become object of rollover, and shall be held for one night. The positions that have been opened at 22:01 will not become object of rollover before the next day. But when opening position at 21:59, the rollover shall be executed at GMT 22:00. For various positions that have been opened at 22:00, the debitor or creditor will appear in your account within 1 hour, which will be directly applicable to your account that is already logged in.