Overnight Positions Fees
Traditionally inter-bank foreign exchange transactions are settled on
pre-arranged value dates. In other words if a trader sells 1 million EUR against
USD spot on Tuesday, that means he must deliver the value of 1 million Euros on
Thursday in order to receive the USD equivalent sum based on the exchange rate
agreed upon. (settlement dates in the spot market are valued on a 2 working day
basis).
Euro Bancorp adopts a method of operation by which there are no value dates on
any operations and no close out and re-opening of open positions at close of
business. We call this process a synthetic spot transaction. This results in a
simple one line transaction on the customer's transaction statement instead of
an extremely complicated multi-entry statement which is generally unintelligable
for anyone not very well aquainted with interbank transactional dynamics.
Euro Bancorp applies a cost of carry on behalf of the market or the customer on
open positions held overnight. This overnight cost of carry is presented as a
simple flat fee either paid or charged on a customer's account. This process
makes for extremely simple statements and greatly increased executional
transparency since we do not modify the original price of the position entered
into by the customer.
Overnight costs are credited & debited on any positions held after 23:00 CET. As
the markets are closed on Saturdays and Sundays there is no rollover on these
days but the banks still calculate interest on any position held over the
weekend. To account for this the procedure in the forex market is to apply 3
days of rollover on Wednesdays. The exception being USD CAD where three days of
rollover will be applied on a Thursday to take account of the weekend.
Those fees for credit and debit can be found in the indicative table, which is
daily updated accordingly to market situations.