It looks like different brokers use different approaches to overnight positions. Most brokers engage in swaps for each open position at the rollover time. Some brokers who track balances in multiple currencies (like InteractiveBrokers) do settle each currency and automatically provide loans where a balance is negative, charging loan interest. If I open and close the same cross then charges are similar in both cases, but if I use different crosses and don’t reverse each open order, the results can be very different.
Suppose, I open 3 market orders and keep them overnight:
Buy GBP/CAD
Sell GBP/AUD
Sell AUD/CAD
For simplicity, let’s suppose that the amounts and rates are such that the net result for each currency is zero (that is I receive as much in each currency as I pay in it, after fees).
As a result, with InteractiveBrokers I don’t pay or receive any interest, however, most brokers charge for the swap for each position separately.
Question: does anyone know of brokers who settle like InteractiveBrokers and who would not charge rollover fees in the example above?
I am not sure what you means as the swap is calculated on the interest rate differentials between the base currency and the secondary currency. But yes, Islamic account are swap-free and are mainly designed for religious islamic people that cannot pay/receive interest based on their religion
You are right, the swap interest is calculated as a difference between base and quote currencies. In theory they would cancel each other out in the example above. However, when you check broker charges for going long and short the same cross, they are not equal. So, if I don’t ever close those 3 positions (and I don’t have to because the overall exposure is zero) I will nevertheless end up paying forever for the swaps.
I know of Islamic accounts but I’m not sure any broker would tolerate hundreds positions rolled over daily for free.