A specialized forward transaction (a type of forward swap) in the foreign exchange markets which is used to postpone or roll a maturing foreign exchange deal out to a future value date. This one-day swap is quoted between tomorrow and the next day (it is carried out between tomorrow and the spot rate). A trader can maintain a long position in the underlying currency transaction for one more day without having to make physical delivery of the underlying amount of currency. Theoretically, the trader could continue to roll the value date using tom/next transactions and keep the position on for an unspecified period of time.

Suppose, for example, that a trader buys 20 million euros against dollars spot at 1.2000. Spot transactions are typically due in two business days. If, on the dealing day, the trader decides to extend the value date by using a tom/next. In the tom leg of the transaction, the trader sells 20 million euros for dollars for value tomorrow (which corresponds to the original deal’s value date). The second leg of the tom/next is a spot transaction to buy 20 million euros against dollars for the next value date. This allows the trader to maintain his long position in 20 million euro / dollar for one additional day without being required to make physical delivery.

This forward transaction is known for short as tomorrow next or simply as T/N.