A spot transaction on the FX market is a transaction where the seller sells a certain amount of currency and receives payment from the buyer in another currency. What distinguishes the spot transaction from many other FX transaction is the fact that the sold currency will change hands right away. The payment is then payed on the spot date, which is usually just one or two bank days after the day of the sale.
- An FX spot that involves USD + EUR, TRY, RUB or CAD will normally has its spot date one bank day after the sale (T+1).
- Other FX spots normally have their spot date two bank days after the sale (T+2).
Always check the details of the agreement before you enter into any binding obligations, to make sure you know exactly when the spot date is for this specific FX spot.
The exchange rate used for an FX spot is called spot exchange rate.
One of the most common FX transactions
FX spot transactions are among the most common transactions on the FX market. In 2013, the daily turnover for FX spots were the equivalent of almost 2 trillion USD.
Large traders (such as major banks) often carry out their FX spot transactions through DirektDetta, while other traders (including small retail traders) go through an broker. Virtually all online FX brokers has an FX spot service.