Tom-NextT/N
Tom-next (“tomorrow to next day”) is a short currency swap that rolls a spot position forward by one business day. Forex brokers use it, or something similar, to work out the daily financing charge or credit on positions held overnight.
Tom-next, short for tomorrow-next, is a one-day currency swap that pushes a spot position forward by one business day. Dealers use it to avoid delivering currencies, and forex brokers use it, or something like it, to calculate the overnight charge or credit on open positions.
- Category
- Derivatives
- Reading time
- 4 min
- Also called
- Tomorrow-next, Tom/next swap, Tom-next rollover
- Updated
Tom-next in plain words
Tom-next covers the period from the next business day up to, but not including, the business day after that.1
A tom-next swap lets two parties cancel a currency payment just before it settles and push the position one day forward.2
The price of the swap reflects the interest-rate gap between the two currencies, so holding the higher-yielding one tends to earn a credit.
How a tom-next roll works
Open a spot position
A spot trade normally settles in two business days.
Reach the day before value
The original trade now settles tomorrow.
Do the tom leg
Reverse the position for value tomorrow, so the original obligation is offset; the FX Committee calls this a way to roll the position to the next day.2
Do the next leg
Reopen the same position for the next business day.1
Apply swap points
Expect the rollover to have two parts: the tom-next swap points and financing on any open profit or loss.3
Repeat daily
A broker rolls again each day the position stays open.
Worked examples
Example 1 — Earning a credit
≈ $11.11 creditA hypothetical trader is long a currency yielding 5% against one yielding 1% on a $100,000 position.
| Rate gap | 4% a year |
| Daily credit | $100,000 × 4% ÷ 360 ≈ $11.11 |
Every FX position held overnight is debited or credited interest as it rolls to a new value date.3
Example 2 — Paying a debit
≈ $11.11 debitThe same hypothetical trader is short the 5% currency instead.
| Rate gap | −4% a year |
| Daily debit | ≈ −$11.11 |
The rollover combines swap points with financing of open profit or loss, so its sign flips with trade direction.3
Example 3 — Weekend roll
≈ $33.33 creditA hypothetical position is rolled on a Wednesday, when value dates jump over a weekend.
| Days financed | 3 |
| Daily credit | $11.11 |
| Total | ≈ $33.33 |
The period runs up to the next business day, so weekends and holidays fall inside it.1
Tom-next vs spot
| Aspect | Tom-next | Spot |
|---|---|---|
| What it is | One-day FX swap | Outright currency trade |
| Value date | Tomorrow to next day | Usually two business days |
| Main purpose | Roll or finance a position | Buy or sell currency |
| Price driver | Interest-rate gap | Exchange rate |
Where tom-next shows up
Broker rollover
Retail Funding Rate-style overnight charges in forex.
Dealer liquidity
Banks shift settlement by a day.
Carry trades
Holding the higher-yielding currency earns the Interest Rate gap.
Settlement netting
Offsetting payments before Settlement.
Advantages and disadvantages
Advantages
- Keeps a position open without delivering currency.
- Cost is tied to interest rates and easy to estimate.
- Lets dealers manage settlement one day at a time.
Disadvantages
- Daily costs add up on long-held positions.
- Rates can change suddenly with central bank moves.
- Broker markups can make retail rollover worse than the interbank rate.
- Weekend and holiday rolls can be confusing.
Going deeper
Read as far as you need. Each level builds on the one before it.
Why rolling is needed
Beginner
Spot FX settles in a couple of days, so brokers roll positions still open at 5 p.m. New York time.3
Swap points
Intermediate
Tom-next swap points reflect the interest-rate gap between the two currencies; the rollover adds financing on open profit or loss.3
Settlement risk
Advanced
Dealers use tom-next swaps to roll positions forward a day, and these trades feed into how netting is designed.2
Common mistakes
Ignoring rollover cost
Long Position Trading in forex can be eaten by swaps.
Assuming rates are fixed
Rates move with Central Bank decisions.
Forgetting weekends
Some days charge multiple days of financing.
Confusing tom-next with spot
It is a swap, not a new directional trade.
Check your understanding
Test yourself before moving on. Each answer comes with an explanation.
Key points to remember
- Tom-next is a one-day FX swap.
- It moves a spot position to the next business day.
- Its price reflects the interest-rate gap.
- Brokers use it to set overnight charges or credits.
- Costs add up the longer a position is held.
Frequently asked questions
Is tom-next the same as a swap fee?
Why do I pay triple swap some days?
Can rollover be positive?
Further learning
- Spot Trading
The trade tom-next rolls.
- Interest Rate
What drives swap points.
- Settlement
When currencies change hands.
- Trading Fees and Commissions
Other costs of holding trades.
Sources
This article is written in our own words. The sources below support the specific facts, rules and figures marked with a number in the text. Links open the original publisher’s page.
- International Capital Market Association (ICMA). ERCC TMA Template – Glossary of matching fields (opens in a new tab) Checked .
- Federal Reserve Bank of New York (Foreign Exchange Committee). Guidelines for Foreign Exchange Settlement Netting (1997) (opens in a new tab) Checked .
- Standard Bank. Webtrader Glossary (T) (opens in a new tab) Checked .
Educational content, not financial advice. Examples use hypothetical prices and simplified costs; actual fees, margin rules and regulations vary by broker, market and country. We are not affiliated with any publisher linked above. Last reviewed . Report an error or request a source credit.