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What is a spot transaction?

April 26, 2017spot transaction

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What is a spot transaction?

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A. A spot transaction is an agreement to buy or sell a currency to be delivered and settled usually within two working days, as per the value or settlement date agreed. VFX can provide settlement to clients of up to 5 workings days to allow for BACS payments. Spot transactions are an ideal tool for businesses or private individuals that require delivery of currency within a short period of time.

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In a spot market, transactions are settled ”on the spot”. Once a trade is agreed upon, the settlement – i.e. the actual exchange of money for goods – takes place with the minimum possible delay. When a person selects a shirt in a shop and agrees on a price, the settlement (exchange of funds for goods) takes place immediately. That is a spot market.