How is funding on forex positions calculated?
FX FUNDING
A tom-next rather than an interbank rate is used in the calculation of funding costs for forex.
Tom-next is the day’s market swap rate for that pair.
Example tom-next rate: -1.39/-0.39.
-0.39 would be used to calculate the funding cost on a long position.
-1.39 would be used to calculate the funding cost on a short position.
Size x (tom-next rate + admin fee)
Size means total value of lots (number of lots x value per lot)
Tom-next is the day’s market swap rate for that pair
Admin fee is no more than 0.5% per annum
Three-day funding for tom-next is charged on a Wednesday, while three-day funding for admin fees is charged on a Friday.