What is a swap fee?
In FX trading, the swap fee, also called interest fee, is the cost (or credit) applied when a position is held overnight.
It is calculated based on the interest rate differential between the two currencies in the pair. For example, on EUR/USD, if U.S. rates are higher than eurozone rates, a trader long EUR/USD pays a swap fee, while a trader who short EUR/USD receives the swap fee.
The principle is straightforward when benefiting from interbank conditions. However, in the OTC world, where FX/CFD brokers operate, nothing obliges the intermediary to replicate this rate, which introduces opacity. A broker often determines the swap fees it charges itself. It can add a variable markup, difficult for the client to quantify, and may even change its conditions without prior notice.
By contrast, FX futures embed the cost of carry until expiry directly in the contract price. This is why there is often a difference between the spot price and the corresponding futures price, a difference that narrows as expiry approaches. No additional overnight swap fee is applied. The cost is transparent, predictable, identical for everyone and neither marked up nor adjustable.
Swap fees and client positioning
To examine whether swap fees may vary alongside client positioning, we analyzed for one month (29/09/25 to 29/10/25) the long/short EUR/USD swap fees of an FX/CFD broker.
During this period, we compared the swap fees with the long/short ratio published by the broker. ECB and Fed policy rates did not change during this period, so the observed variations cannot be attributed to monetary policy adjustments.
Here is what we found:
-When most clients were long, the long swap fee became more expensive.
Example: on 22 October, with 58% buyers → the least favourable long swap fee of the period (–11.5 USD per standard lot).
-When most clients were short, the long swap fee became cheaper and the short credit decreased.
Example: on 6 October, with only 33% buyers → the most favourable long swap fee (–9.0 USD per lot) and the least generous short credit (+2.7 USD per lot).
-Throughout the period, swap fees appeared to move in line with the structure of the client book.
More buyers → higher cost for buyers.
More sellers → lower credit for sellers.
This type of adjustment may seem trivial day to day, just a few swap points. But at year-end, the impact on PnL becomes significant for anyone holding overnight positions.
Additionally, the weekend swap fees, usually charged on Wednesday, triples the charge once a week, amplifying the effect.
Not all FX/CFD brokers operate this way
It is essential to nuance.
The practices observed in this example do not necessarily reflect those of all FX/CFD brokers. The point of this experiment is simply to show that such practices exist and that such adjustments may be possible in an OTC framework.
But most regulated brokers apply a stable rate with a fixed, disclosed markup. Some even outsource the entire process to a third-party CFD provider, reducing the scope for discretionary internal adjustments.
Broker selection considerations
When comparing FX/CFD brokers, regulation, swap-fee disclosure and the range of products available are relevant factors to review.
A broker overseen by a reputable regulator may be subject to stricter conduct, disclosure and oversight standards. Traders can also compare whether the broker provides access only to OTC products or also to centralized markets such as listed futures or equities.
Simultaneous access to centralized and OTC markets can make costs easier to compare across products, provide broader product choice and help traders identify where potential conflicts of interest may arise. The key point is not that one product type is always preferable, but that the trader should understand how each cost is generated before holding positions overnight.
Final thoughts
Our example showed a notable correlation between client positioning and swap fees, consistent with the possibility of discretionary adjustment. While this observation should not be generalized to all brokers, it highlights the importance of understanding how overnight financing costs are calculated and applied in OTC markets, as these costs may have a material impact on net trading performance over time.
All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience.
