In the real-time foreign exchange market, all transactions must be settled within two working days. Overnight extension refers to closing the position on the value date of the day, and opening the same position at this price after calculating the interest rate difference between the two currencies on the value date of the next day. According to the practice of international banks, CMS automatically rolls all open positions until 5 pm EST. For example, for a position executed on Monday, the interest date is Wednesday. However, if a position is opened on Monday and held overnight, its interest date is Thursday. The exception is to hold positions on Wednesday until Thursday. Because the theoretical value date should be Saturday after the extension, the actual value date is Monday because the bank is closed on weekends. Due to the weekend, all positions held overnight on Wednesday will bear interest for two more days. For positions whose value date is a holiday, additional interest will also be calculated.

CMS customers may earn or be deducted overnight interest, depending on their positions and the interest rate difference between the two related currencies. For example, the benchmark interest rate in Britain is higher than that in Japan, so if a customer buys pounds, he/she will get overnight interest at 5pm EDT. On the contrary, if he/she sells pounds, he/she needs to pay overnight interest at 5pm EST.

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