Costs, Spreads & FeesTomorrow NextT/N
Tom-Next
A one-day forex swap rolling a position's value date from tomorrow to the next business day, the basis of daily rollover.
What Tom-Next means
Tom-next is short for tomorrow-next-day. It is a pair of simultaneous offsetting transactions, one settling tomorrow and one settling the following business day, and its effect is to push a position's value date forward by exactly one day without altering the exposure. Since spot forex settles two business days after trade date, a position that is not intended for delivery must have its value date rolled every day, and the tom-next swap is the instrument used to do it.
The price of the tom-next roll is determined by the interest rate differential between the two currencies over the day being rolled, quoted in forward points. That price is what reaches the retail trader as the swap credit or debit, after the broker applies its own markup. Understanding this chain explains several things that otherwise look arbitrary: why swap rates track relative monetary policy, why they change when a central bank moves, and why they are asymmetric between the long and short side of the same pair.
It also explains the calendar quirks. Because settlement skips weekends and public holidays, the roll executed on Wednesday covers Friday to Monday and carries three days of value, giving the familiar triple swap; a holiday in either currency's home market shifts the affected roll to a different day. Institutional participants trade tom-next directly to manage settlement, while retail traders only ever see its net effect on the account.
Worked example
A EUR/USD position held over Wednesday's 5pm New York cut-off is rolled from a Friday value date to the following Monday, so the tom-next adjustment applied that night covers three days of interest rather than one.
Related terms
- SwapThe interest credited or debited for holding a forex position overnight, based on the two currencies' rate differential.
- RolloverThe daily process of moving an open position's settlement date forward, which generates the swap charge or credit.
- Spot MarketThe market for immediate delivery of currency, with spot FX trades conventionally settling two business days after the trade date.
- Forward ContractAn agreement to exchange currencies at a fixed rate on a future date beyond the standard spot settlement window.
- Interest Rate ParityThe no-arbitrage relationship linking spot and forward exchange rates to the interest rate differential between two currencies.
Frequently asked questions
What does Tom-Next mean in forex trading?
A one-day forex swap rolling a position's value date from tomorrow to the next business day, the basis of daily rollover.
How does Tom-Next work in practice?
The price of the tom-next roll is determined by the interest rate differential between the two currencies over the day being rolled, quoted in forward points. That price is what reaches the retail trader as the swap credit or debit, after the broker applies its own markup. Understanding this chain explains several things that otherwise look arbitrary: why swap rates track relative monetary policy, why they change when a central bank moves, and why they are asymmetric between the long and short side of the same pair.
What is an example of Tom-Next?
A EUR/USD position held over Wednesday's 5pm New York cut-off is rolled from a Friday value date to the following Monday, so the tom-next adjustment applied that night covers three days of interest rather than one.
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