Tom-Next Rate

The tom-next rate — short for tomorrow-next — is the money-market price for rolling a currency position from tomorrow's value date to the following business day, and it is the wholesale input from which overnight swap charges are built. A spot FX trade settles two business days forward, so a position held past the daily cut-off has to be rolled to keep settlement in the future rather than delivering the currency. Retail traders never see the tom-next rate directly; they see the swap the broker publishes, which is the tom-next price plus the firm's own adjustment. That structure explains several things that otherwise look arbitrary: why swaps change from night to night as money-market rates move, why long and short swaps on the same pair are rarely mirror images of each other, and why the holiday calendar in either currency shifts which nights carry more than one day of interest.