Who sets swap rates and why they differ between brokers

Anna held a micro lot on USD/TRY for three weeks, betting on the lira falling. The rate did fall, and yet her account was barely in the green. The swap had eaten the difference — a few units of currency charged every night, costs she had not even thought about when she opened the position. The interesting part came later: a friend trading the same pair at a different broker had paid a noticeably gentler swap. Where does that gap come from, if there is only one market? In this article I explain who really sets swap rates and why the same pair can carry a different swap at every broker.

Where does a swap rate come from in the first place?

A swap point is not a fee a broker invents for its own sake. Its base is the interest rate gap between the two currencies that make up the pair. When you hold a position overnight, in economic terms you are borrowing one currency to hold the other — and each of those currencies has its own rate. If you buy the higher-rate currency against the lower-rate one, that gap works in your favour. In the opposite direction you pay. The same force that drives the carry trade on USD/JPY sits behind every single swap point on your account.

The interbank market prices that rate gap as so-called forward points — how far the forward rate sits from the spot rate. Put plainly: the rate for delivery in two months differs from today's rate precisely because, over those two months, one currency earns more interest than the other. The relationship even has a name — covered interest rate parity — and it is one of the firmest equations in international finance. The forward, and therefore the swap, is not a whim. It is the arithmetic of interest rates.

How does the market turn a rate gap into a daily point?

Here comes the mechanic a retail client rarely sees: tom-next. A spot account has a standard value date of T+2 — physical settlement falls two business days after the trade. If nobody did anything, a position held longer would have to be physically delivered. The broker does not want that and neither do you, so every night the position is rolled: closed on the old value date and reopened on a new one, one day further out. That pair of trades — tomorrow against next — is exactly what tom-next means, and it is what carries the rate gap onto your account as a single daily point.

The official MetaTrader 5 documentation describes it directly: on over-the-counter markets, moving a position to the next trading day happens as a swap, which is precisely this overnight roll. The market where those points are set is enormous — according to the BIS survey from April 2022, FX swaps are the largest segment of the currency market, with turnover of 3.8 trillion dollars a day. I break down the two legs of such a transaction in a separate piece on the institutional FX swap.

"When you hold a position overnight you either earn or pay interest, depending on the interest rate differential between the two currencies you are trading." — Kathy Lien, *Day Trading and Swing Trading the Currency Market*, Wiley, 2015.

Where does the broker step in, and why do rates differ?

And here is the catch. The market base is the same for everyone — the gap between euro and dollar rates does not depend on where you hold your account. But the broker takes that base and converts it into its own swap table, adding a margin. Exactly as it adds a markup to the spread between the bid and the ask. The result? A point that is slightly positive on the market stays slightly positive at one broker, while at another it lands at zero or below — because its markup is larger.

The second reason for the differences is more technical: brokers fund positions with different liquidity providers and reference different benchmark rates. The starting point can therefore vary a little before anyone even adds a margin. The reality is that this layer is rarely transparent — at most brokers the swap table is a finished long and short number, with no breakdown into "this much from the market, this much ours". What you see is the market base run through one broker's price list. Why the market rate itself is not "clean" is explained well by the BIS analysis of interest parity and the cross-currency basis — since the 2008 crisis, funding through an FX swap regularly departs from textbook theory.

What does the difference look like in numbers?

Take an illustrative example to see what is at stake. Assume a pair where the base currency carries a rate roughly four percentage points higher than the quote currency. On the market that produces a clearly positive carry for a long position. You open one micro lot and hold it for 30 nights.

The figures are illustrative and deliberately rounded, but the proportion is real. The short side can be worse: the same pair can show a negative swap on both the long and the short position, because the broker markup subtracts points in both directions. In other words — there is no guarantee that either side gives you a positive flow. A short pause: before you assume your broker pays you for the carry, check the real point in the table. The surprise can be unpleasant.

What does this teach an individual investor?

The most important lesson is this: you do not pay the "market" swap rate, you pay your broker's rate. That distinction changes how you should plan any position held longer than a single day. For a scalper or a day trader the swap is irrelevant — the position closes before the roll anyway. But for anyone holding a currency for weeks, the swap point becomes a real line in the cost ledger, sometimes larger than the spread and commission combined. For a deeper reference on the term itself, ForexMechanics keeps a glossary entry on the swap.

You are probably thinking now: "if it is a rate gap, surely I can work it out myself?". Partly, yes — you can estimate the base if you know the rates of both currencies. But you cannot guess the broker margin, because it is not published outright. That is why the only reliable number is the one in your broker's swap table, ideally checked just before you open the position. Tables get updated as central bank rates change, so a point from six months ago may no longer apply. I lay out the full mechanic of the charge itself — what a swap is and when it works in your favour — in the article on the forex swap.

What to do tomorrow

1. Open your broker swap table and write down the long and short point for the pairs you trade. Most platforms show it in the instrument specification or on a terms page. Note the values for two or three of your main pairs, separately for the long and the short side, so you have them at hand before you click buy or sell.
2. Work out the swap cost for your typical position held for a week. Multiply the daily point by the number of nights and remember the triple charge on Wednesday. If the result is comparable with the spread, you have hard proof that the swap is a real cost rather than a detail — and a reason to factor it into the plan for every longer-held position.
3. Compare the swap tables of two brokers on the same pair. Visit the terms pages of two regulated brokers and line up the point for EUR/USD or USD/PLN. The difference you see is exactly the margin this article describes — and a concrete number to weigh if you plan a position strategy built on the carry.
4. Check whether your broker uses a triple swap day other than Wednesday. Look in the specification or ask support, because a few brokers shift the triple charge to a different day for selected instruments. It takes five minutes and saves an unpleasant surprise when you plan an entry right before the weekend.