In
finance
Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of production, distribution, and consumption of money, assets, goods and services (the discipline of f ...
, the spot date of a transaction is the normal settlement day when the transaction is carried out as soon as practical, i.e. "on the spot".
[UNDERSTANDING ACCOUNTING AND FINANCE: THEORY AND PRACTICE]
p.401
/ref> This kind of transaction is called a "spot transaction" or simply "spot", and is often described as such in contrast to a transaction which is not settled immediately, such as a ''futures contract
In finance, a futures contract (sometimes called a futures) is a standardized legal contract to buy or sell something at a predetermined price for delivery at a specified time in the future, between parties not yet known to each other. The asset ...
'' or a ''forward contract
In finance, a forward contract or simply a forward is a non-standardized contract between two parties to buy or sell an asset at a specified future time at a price agreed on at the time of conclusion of the contract, making it a type of derivat ...
''.
Settlement date
The spot settlement date Settlement date is a securities industry term describing the date on which a trade (bonds, equities, foreign exchange, commodities, etc.) settles. That is, the actual day on which transfer of cash or assets is completed and is usually a few days a ...
may be different for different types of financial transactions, based on market practice. For example, in the foreign exchange market
The foreign exchange market (Forex, FX, or currency market) is a global decentralized or over-the-counter (OTC) market for the trading of currencies. This market determines foreign exchange rates for every currency. It includes all as ...
, spot is normally two banking days forward for the currency pair
A currency pair is the dyadic quotation of the relative value of a currency unit against the unit of another currency in the foreign exchange market. The currency that is used as the reference is called the counter currency, quote currency, or ...
traded.
image:OptionsTimeline.GIF
Other settlement date Settlement date is a securities industry term describing the date on which a trade (bonds, equities, foreign exchange, commodities, etc.) settles. That is, the actual day on which transfer of cash or assets is completed and is usually a few days a ...
s are also possible. Standard settlement dates are calculated from the spot date. For example, a one-month foreign exchange forward settles one month after the spot date—i.e., if today is 1 February, the spot date is 3 February and the one-month date is 3 March, assuming these dates are all business days. For a trade with two dates, such as a foreign exchange swap
In finance, a foreign exchange swap, forex swap, or FX swap is a simultaneous purchase and sale of identical amounts of one currency for another with two different value dates (normally spot to forward) and may use foreign exchange derivatives ...
, the first date is usually taken as the spot date.
See also
* Business date conventions
* Day count convention In finance, a day count convention determines how interest accrues over time for a variety of investments, including bonds, notes, loans, mortgages, medium-term notes, swaps, and forward rate agreements (FRAs). This determines the number of days ...
* Foreign exchange date conventions
* Foreign exchange spot
* International Monetary Market date conventions
* Settlement date Settlement date is a securities industry term describing the date on which a trade (bonds, equities, foreign exchange, commodities, etc.) settles. That is, the actual day on which transfer of cash or assets is completed and is usually a few days a ...
* Spot price
In finance, a spot contract, spot transaction, or simply spot, is a contract of buying or selling a commodity, security or currency for immediate settlement (payment and delivery) on the spot date, which is normally two business days after the ...
* T+2
T2, T-2, T2, T2 may refer to:
Computing
* Apple T2, a SoC from Apple for security and hardware management within Intel based Macs
* Palm Tungsten T2, a Palm OS-based personal digital assistant
* T2 or T-2, a 6.312 Mbit/s T-carrier in telecommuni ...
* Trade date
Trade involves the transfer of goods and services from one person or entity to another, often in exchange for money. Economists refer to a system or network that allows trade as a market.
An early form of trade, barter, saw the direct excha ...
* Value date
References
{{reflist
Financial markets
Bond valuation
Swaps (finance)
Settlement (finance)
