All Forex quotes are typically based on settlement business days after the transaction was executed (the one major exception being the USD/Canadian Dollar which settles after one business day).
Theoretically a currency trader will take physical delivery of the currency in two days; however, delivery is avoided by rolling the positions forward one day, usually referred to as Tomorrow Next Day (Tom Next) procedures. The newly opened position is assigned a new value date allowing the client to hold this position another day without taking delivery of the currency. The Tom Next rate is determined by the respective difference in interest rates between the two currencies held. If a trader is long a high interest currency and short a low interest currency he will earn interest for one day. If a trader is holding the foreign currency with the lower rate of interest he will pay interest. These payments are received during the establishment of the new opening rate, in the form of a slightly better or worse price after the roll (swap) has taken place.
During the roll procedure all open positions are closed at the current market rate, and any unrealized profits or losses are realized. This new rate is determined by the price the position was closed out at plus or minus the Tom Next rate. If a trader is flat e.g. long €2 million EUR/USD and short €2 million EUR/USD it is not necessary to roll positions.
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