In Forex trading, being aware of the swap rate is essential in money management, especially when carrying over the open position to the next trading day.
Generally, the swap value across days uses the LIBOR-linked interest rate swap method.
BigBoss combines the LIBOR interlocking system and the funding system as a “combination swap system”.
◆BigBoss Swap Calculation Formula
BigBoss Swap Rate = LIBOR interest rate + Cost of Funds
*LIBOR - London Interbank Provided Rate, an interbank transaction rate in the London market calculated and published by the Intercontinental Exchange (ICE).
Please refer to the following link about LIBOR.
Other Forex securities companies may have a fixed swap interest rate because they receive the transaction by themselves, without handling it to the bank.
BigBoss covers multiple banks in Asia and Europe, hence the cost of funds depending on the volume of transactions in each currency.
As BigBoss uses the combination swap system, there may be a difference between the "swap value of other companies" and the "swap value of BigBoss".
The transaction amount the bank(s) cover will change depending on the different amount of open long and short positions we have, and the procurement cost will also vary depending on the currency.
On the other hand, the smaller position side may get the swap from the larger position side.
Based on the above reasons, there are cases that while the swap value of another company is negative, our swap value is positive.
Please refer to the Open Position.
● Example USDJPY (rate = 105.00)
LIBOR interest rate
Long: ▲0.05% / Short: 0.03%
Long: +0.08% / Short: ▲0.08%
Big Boss Position Long
▲ 0.05 % + 0.08 % = 0.03 %→ 105 x 0.0003 = + 3.1 pt
Other Forex companies Position Long
▲ 0.05 % → 105 x (▲ 0.0005) = ▲ 5.3 pt
Time of Swap Points Reflection
Coordinates with the inter-bank market transaction, swap points reflect at the inter-bank market session closed time*.
* The session closed time is as follows.
・ Summer time: 21:00 (GMT +0)
・ Winter time: 22:00 (GMT +0)
Swap points do not renew on weekends, and the weekend swap points will be reflected at the end of the session on Wednesday.
* For instance
- For Monday's position, daily amount swap points would be reflected at the end of the session (Monday 21:00 or 22:00 GMT +0).
- For Friday's position, daily amount swap points would be reflected at the end of the session (Friday 21:00 or 22:00 GMT +0).
- For Wednesday's position, three-day amount swap points would be reflected at the end of the session (Wednesday 21:00 or 22:00 GMT +0).