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Swap on Hedged Positions

Both legs of a hedge are financed separately, so the two swaps rarely cancel — locking a position freezes price risk, not cost.

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38 of 49 in Costs & Fees

Holding a long and a short in the same pair does not normally cancel the financing. Each leg is rolled over separately, so the account receives one swap and pays the other — and because the long and short swap rates are quoted with a markup on both sides, the pair usually nets to a debit rather than to zero. This is what makes "locking" a losing position an expensive way to postpone a decision: price risk is frozen, financing is not, and a weekend rollover charges several days at once. Swap-free accounts change the arithmetic without removing it, often replacing the swap with an administration fee after a holding period. The contract specification lists both swap sides per instrument; the net of the two, multiplied by the nights you expect to be locked, is the real cost of waiting.

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