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Question regarding swap rates

  • #1
  • First Post: Sep 12, 2009 6:30pm Sep 12, 2009 6:30pm
I understand why there is positive and negative interest on a position depending on the pair and whether you're long or short but what's the explanation for some brokers charging interest on both sides of a pair? TIA...
  • #2
  • Sep 13, 2009 6:41am Sep 13, 2009 6:41am
It's just another way of your broker skimming some funds from you. It occurs on smaller accounts and is usually called a "maintenance fee" or some other clever name.
  • #3
  • Sep 13, 2009 8:17am Sep 13, 2009 8:17am
Quoting tobijohn
I understand why there is positive and negative interest on a position depending on the pair and whether you're long or short but what's the explanation for some brokers charging interest on both sides of a pair? TIA...
Good question!

Because banks charge more if you borrow than they pay if you deposit, that's the nature of their business.

That differential has widended since the recent financial crisis, and interest rate differentials of respective countries have narrowed, which together results in negative rollover for both currencies (both sides of the trade) on some pairs.

It's down to the banks, not the broker.
  • #4
  • Sep 13, 2009 11:56am Sep 13, 2009 11:56am
This has nothing to do with banks. They don't know anything about your mini-lot.
  • #5
  • Sep 13, 2009 12:11pm Sep 13, 2009 12:11pm
Quoting philmcgrew
It's just another way of your broker skimming some funds from you. It occurs on smaller accounts and is usually called a "maintenance fee" or some other clever name.
Yea Phil, I think the bookies call it Vigorish. LOL
  • #6
  • Last Post: Sep 13, 2009 2:47pm Sep 13, 2009 2:47pm
Quoting philmcgrew
This has nothing to do with banks. They don't know anything about your mini-lot.

lol, and where exactly do you think brokers hedge their net exposure? What, you expect them to subsidize your carry costs?

Last time I checked, brokers weren't running a charity!
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