ACM USA simplifies the FX transaction in that there is no delivery date. Traders may hold positions indefinitely as there is no expiration. Positions held overnight or over weekends will be automatically rolled over by ACM USA’s software.
Traditionally, foreign exchange transactions were settled on pre-arranged value dates in the interbank market. As an example, let’s say you sold 1 million Euros against the US dollar on Tuesday. Since settlement dates in the spot market generally take two working days, on Thursday you would deliver the value of 1 million Euros in order to receive the US dollar equivalent based on the agreed-upon exchange rate. This rendered the process complex and confusing for all but the most knowledgeable traders.
At ACM USA, there is never an expiration; you can hold a position indefinitely and we will roll your position automatically. There are no value dates on any operations and there are is no closing out and re-opening of positions at close of business. We call this process a synthetic spot transaction. It creates a simple, easy-to-understand, one-line transaction on your statement instead of a complicated multi-entry transaction. Moreover, transparency is increased, since we don’t ever modify the original price of the position entered by the customer.
We do apply a “cost of carry” on behalf of the market for open positions held overnight. Essentially, the overnight cost of carry is calculated as a flat fee, which is then credited or debited to the client’s account on any positions held after 5 p.m. ET time every day of the week. Fees can be found in the indicative table, which is updated daily accordingly to market situations. These fees arise from the interest rate differential between different currencies. As one currency may have a high interest rate and the other low, the difference between the interest rates is divided by 365 and in-turn multiplied by the client’s open positions. This is called the “cost of carry” for a particular day. Depending on the orientation of the position, a client can expect to collect or pay money.
This process makes it easy to understand your account statements, which is important to us: Unlike many of our competitors, we believe this process should be as transparent as possible.
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