Day Count Conventions Every ACI Candidate Must Know.
- swapskills
- Mar 25
- 3 min read
Updated: 4 days ago
Stop Losing Easy Marks in the Rates Section
Day count conventions are not exciting.
But they are exam gold.
In the ACI Dealing Certificate, day count errors are one of the most common reasons candidates drop marks in:
Money markets
Deposits
FRAs
Bonds
Interest rate swaps
The maths is rarely difficult.
The mistake is usually using the wrong denominator.
Let’s fix that properly.
1️⃣ What Is a Day Count Convention?
A day count convention determines:
How interest accrues
How many days are counted in a period
What denominator is used (360 or 365)
Basic interest formula:
Interest = Principal × Rate × (Days / Day Count Basis)
If you use the wrong basis, the answer is wrong.
It's as simple as that.
2️⃣ The Core Conventions You Must Know
For the ACI exam, these are essential:
ACT / 360
Used in:
Money market deposits (USD, EUR interbank)
FRAs
Short-term money markets
Formula: Notional x Days counted exactly / Denominator (here it is 360)
$10,000,000 at 4.20% for 92 days (ACT/360)
Interest = 10,000,000 × 0.042 × (92/360)= $107,333
If you use 365 by mistake, you lose the mark.
ACT / 365 (Fixed)
Common in:
GBP money markets
Some Commonwealth currencies
Notional x Days counted exactly / Denominator (here it is 365)
This small difference materially changes the answer.
Exam trap: Mixing ACT/360 and ACT/365 in cross-currency questions.
30 / 360
Used mainly in:
Corporate bonds
Some structured products
Each month assumed to have 30 days. The year is assumed to have 360 days.
Cleaner for bond coupon calculations.
Exam trap: Candidates accidentally use ACT instead of 30.
ACT / ACT
Used in:
Government bonds (varies by country)
More complex because:
Uses actual days
Denominator may change in leap years
The ACI usually keeps ACT/ACT straightforward — but you must recognise it.
3️⃣ Where the Exam Catches Candidates
The ACI exam does not ask:
“What is ACT/360?”
It gives you a calculation scenario.
Example:
A bank places USD 5,000,000 at 5% for 120 days.
You must automatically know that the USD money market = ACT/360
The question may not remind you.
That’s the trap.
4️⃣ Why Day Count Really Matters
In real markets, day count conventions affect:
FRA settlement
Swap valuation
Money market yield comparison
Cross-currency pricing
P&L calculations
In the exam, it tests whether you think like a dealer.
Dealers don’t guess denominators.
They know them.
5️⃣ Quick Reference Table (Memorise This)
Instrument | Typical Day Count |
USD Money Market | ACT/360 |
EUR Money Market | ACT/360 |
GBP Money Market | ACT/365 |
Corporate Bonds | 30/360 |
Government Bonds | ACT/ACT |
This table alone saves marks.
6️⃣ The Most Common Mistakes
Let’s be direct.
Candidates lose marks because they:
Use 365 instead of 360
Forget to convert days properly
Ignore leap years when ACT/ACT applies
Mix up bond conventions with money markets
Rush the denominator
7️⃣ The Exam Mindset Shift
When you see a rates calculation:
Pause.
Ask:
What instrument is this?
What currency?
What convention applies?
What is the denominator?
Only then calculate.
That 5-second pause prevents 50% of avoidable errors.
8️⃣ Final Advice for ACI Candidates
Day count questions are mechanical.
That is good news.
Mechanical questions reward preparation.
If you:
Memorise the core conventions
Practise full interest calculations
Slow down before choosing 360 or 365
You turn a common weakness into guaranteed marks.
And remember:
In the ACI Dealing Certificate, you must pass each section individually.
Small calculation errors matter.
Control the mechanics. Protect the marks.
If you're preparing for the ACI Dealing Certificate (New Version) and want structured mock exams, worked interest calculations and realistic exam scenarios, explore the full SwapSkills programme here:
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