Dukascopy Bank‘s Overnight Policy is aimed at providing highly competitive rollover conditions to its clients in order to underline the Bank’s leadership in the FX industry. Dukascopy Bank applies different rollover rates  to ensure that higDukascopy Bank’s Overnight Policy is aimed at providing highly competitive rollover conditions to its clients in order to underline the Bank’s leadership in the FX industry. her trading turnover for a client results in better overnight conditions.

The rollover policy of the client trading accounts is determined dynamically by the trading activity level (Trading Activity). Trading Activity is calculated as the total trading volume on all trading accounts of the client divided by the sum of the trading and overnight volume over the last 30 calendar days.

Note: The overnight volume is the sum of rollover open trades. The trading volume is the sum of all executed orders except for rollover trades.

Trading Activity reflects the trader’s tendency to trade intraday more frequently than to keep positions overnight. Trading Activity is recalculated on a daily basis at the settlement time and the rollover policy is defined according to the percentage levels below:

Advanced Rollover Policy is used by default in case of the absence of trading statistics over the last 30 days and it is provided as a target level which ensures attractive rollover rates for customers. Meanwhile, traders with a higher trading activity above 90% can benefit from premium swap rates. Clients are able to view the rollover policy applied to their accounts in the report called “Rollovers”. For more information about Trading Activity, see the examples below.

Examples of trading activity calculation

 

 

Rollover Procedure

The overnight procedure describes the daily process of rollover, in order to adjust any existing exposure to the new trading day. The process is also known as “position roll”, “carry” or “overnight swap”; it is needed to avoid full cash delivery and receipt of the currencies traded. The end-of-day settlement process is done at 21:00/22:00 GMT [depending on the summer/winter season]. A pair of rollover trades is booked for each open position, as the existing positions are closed for the past trading day at the settlement price and simultaneously re-opened for the new trading day at the settlement price +/- the applicable overnight adjustment in pips as seen in the table. These trades are labeled as “rollover close” and “rollover open” respectively and can be viewed in portfolio and intraday statements. In addition, clients can see the impact of the carry in the position report.

Rollover Updates

Overnight swap prices are commonly based on the central bank reference rates shown in the table below. Overnight swap rates change with changes in the interest rate differentials of the two currencies involved. However, Dukascopy Bank updates its own rates on the basis of interbank market overnight swaps.

Dukascopy Bank uses the following central bank target rates as a basis for its overnight policy set-up. It must be stressed that Dukascopy Bank adds its own carry costs to the rates applied to the clients.

 

• USD                Federal Funds Target Rate
• EUR                Main Refinancing Rate
• GBP                Official Bank Rate
• JPY                 Uncollateralized Overnight Call Rate
• CHF                Average Repo Overnight Rate
• CAD                Target Key Interest Rate
• AUD                Cash Target Rate
• NZD                Official Cash Rate

 

Swap-free-accounts

Swap-free accounts are trading accounts in adherence with Islamic religious principles.

The overnight swap cost which is normally charged or credited to client accounts as price difference between rollover close and rollover open trades is not applied to swap-free accounts meaning that both rollover trades are booked at same price. The Client will not be credited nor debited any interest on any open position in their trading account with Dukascopy Bank at the closing of each business day (21:00/22:00 GMT summer/winter time).In order to prevent abusive use of swap-free conditions and financial damage to Dukascopy, following protection measures are applied:

In addition to the standard volume commission paid by clients, an additional fee of USD 5 per 1 million USD for currencies and USD 7.5 per 1 million USD for precious metals and CFDs is charged to swap-free accounts; Dukascopy estimates its financial damage by calculating the difference between the additional commission paid by the client and the swap amount which is not applied to the account due to the swap-free conditions. If the difference is negative (the “Deficit”) and the account equity does not fully cover the Deficit Dukascopy will block further trading by closing opened exposures and canceling active pending orders.

The Deficit is calculated once a day at settlement time and is applied by adjusting the minimum Stop Loss Level.

The Deficit amount will be debited from the account if:

• the swap-free rollover policy is terminated;
• a full withdrawal is made on the account.

The amount of a partial withdrawal cannot exceed the difference between the account equity and the Deficit.

In case of a contradiction between the present Swap-Free Account Terms & Conditions and any other contractual arrangement between the client and Dukascopy Bank, the present Swap-Free Account Terms & Conditions shall prevail. Dukascopy Bank may change Swap-Free Account Terms & Conditions, decline or cancel the use of swap-free conditions, at its own discretion. Dukascopy reserves the right to debit the Deficit at any time.

Any self-trader may activate/cancel the swap-free conditions at any time from reports as illustrated below:

 

Source: Dukascopy – Changes in the swap-free conditions

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