What is the spot market and on what exchange is it traded?
In the Wall Street Journal, one can read quotations for the spot rate, forward rate, and options. At the spot rate, currencies can be exchanged within two days i.e. on the spot. The word market is a slight misnomer in describing Forex trading, since there is no central location where trading takes place. The bulk of trading is between 300 large international banks, which process transactions for large companies and governments. These institutions are continuously providing prices for each other and the broader market. The most recent quotation from one of these banks is considered the market’s price for that currency. Forex trading is not bound to any one trading floor, but done electronically between a network of banks continuously and over a 24-hour period.
