Rollover refers to the process of closing open position for today's value date and the opening of the same position for the next day's value date at a price reflecting the difference in interest rates between the two currencies. For instance, the primary interest rates in Great Britain are much higher than in Japan, so if a trader buys GBP, he/she will earn interest at 5 PM EST. on the other hand, if he/she sells GBP in this currency pair, he/she will pay interest at 5 PM EST.
Rollover is required because, in the spot forex market, all trades must be settled in two business days. In accordance with international banking practices, CMS automatically rolls over all open positions to the next date at 5 PM EST for settlement. Rollover involves exchanging the position being held for a position expiring the following settlement date. For example, for trades executed on Monday, the value date is Wednesday. The exception is a position opened and held overnight on Wednesday. The normal value date would be Saturday; because banks are closed on Saturday the value date is actually the following Monday. Due to the weekend, positions held overnight on Wednesday incur or earn an extra two days of interest. Trades with a value date that falls on a holiday will also incur or earn additional interest.
CMS clients can earn interest on rollovers, depending on the direction of their positions and interest rate differential between the two currencies involved.
Interest on Unused Margin
Accounts with initial deposits of 10,000 USD or greater will receive 2.00% annual interest on unused margin if unused margin is over 10,000 USD. To be eligible for this interest, a trader must open at least 15 standard 100K lots per month. CMS may alter the interest terms and schedule at its discretion.