All open positions are rolled over based on the daily interest rate differential between the two currencies. Rollover rates can vary on a day-to-day basis depending on the changes in daily interest rates.

A rollover is the exchange of one currency for another, on one day, matched by a reverse exchange on the next settlement day. The two deals are made at the same time. The basis of a rollover is to move a given currency deal forward in time, based on the interest rate differential between the two currencies.

This mechanism will continuously roll forward any open position, as long as you have sufficient margin for your trading, until you decide to close this position.


Example

On Monday you bought 500,000 USD/JPY at the rate of 140.50, value Wednesday as a spot transaction. You decide to keep your position open after 10.00pm so we automatically roll your position to the next value date, Thursday.

The following deals will be transacted on your account (assuming USD/JPY rate is now 141.00):-

You sell 500,000 USD/JPY value Wednesday at 141.02

You buy 500,000 USD/JPY value Thursday at 141.00

Your position has been rolled forward to the next value date, Thursday. The net result of the rollover transaction was to credit your account of 2 pips or USD 70.92 which represents the interest rate differential gain for one day, value Wednesday to value Thursday.

In this example Japanese Yen was at a premium to the US Dollar as Japanese Yen rates were lower than US Dollar interest rates. Because you were short Japanese Yen and long US Dollars you gained the interest rate differential.

If you had the opposite position, where you sold 500,000 USD/JPY, being long Japanese Yen and short US Dollars, then you would lose the interest rate differential and your account would be debited.