The term overnight refers to the term that a financial operation can have, specifically, overnight implies a term or life of one day.
In financial markets, such as the currency market or the stock market, these are operations that are opened on a D day and settled on D + 1, hence its meaning "at night". It also refers to deposits made between banks.
In the case of having a weekend in between, the operation will have a life of three days.
Overnight on the stock market
These operations can be carried out by both professional and private traders. Except for interbank deposits that are limited only to banks, as the name suggests.
In the currency market or Forex market, traders buy or open a currency position today and close it tomorrow. In this case, we understand "tomorrow" after 5:00 pm, considered as the end of the day. This is because the forex market is a continuous market.
On the stock market, speculators buy the securities of a company today and close the operation tomorrow with the risk that it may pose. At the end of the day, life continues despite the daily closing of the markets, so new news may be known at these time intervals about the companies in question, which can benefit or harm their listing.
In relation to CFDs, these are derivative products very frequently used in short-term trading, including overnight trading. This is so because they allow you to participate in the rise and fall of the price of any asset (indices, shares, currency, raw materials, etc.) without the need to pay out the total underlying cash. They are leveraged instruments that make it possible to earn exponential profits, but also suffer considerable losses.
Overnight on the bench
Regarding interbank deposits, banks can also lend and borrow from other banks. However, this operation is no longer as common as in the period prior to the financial crisis of 2007. Now banks lend to each other through other financial instruments that involve a guarantee or collateral, a practice derived especially from the MiFID II (Markets in Finanacial Instruments Directive). For example, through repos.
Additionally, there is also the deposit facility of the European Central Bank (ECB), a monetary policy instrument that belongs to the permanent facilities of the ECB. This allows banks to make overnight or overnight deposits when they have excess liquidity. They are remunerated deposits.