A spot foreign exchange transaction, also known as FX spot, is an agreement between two parties to buy one currency against selling another currency at an agreed price for settlement on the spot date

Spot date

In finance, the spot date of a transaction is the normal settlement day when the transaction is done today. This kind of transaction is referred to as a spot transaction or simply spot....

. As of 2010, the average daily turnover of global FX spot transactions reached nearly 1.5 trillion USD, counting 37.4% of all foreign exchange transactions.

Settlement date

The standard settlement timeframe for foreign exchange spot transactions is T + 2 days; i.e., two business days from the trade date. A notable exception is the USD

United States dollar

The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....

/CAD

Canadian dollar

The Canadian dollar is the currency of Canada. As of 2007, the Canadian dollar is the 7th most traded currency in the world. It is abbreviated with the dollar sign $, or C$ to distinguish it from other dollar-denominated currencies...

 currency pair, which settles at T + 1.

Execution methods

Common methods of executing a spot foreign exchange transaction include the following:

• Direct. Executed between two parties directly and not intermediated by a third party. For example, a transaction executed via direct telephone communication or direct electronic dealing systems such as Reuters Conversational Dealing.

• Electronic broking systems. Executed via automated order
  Order (business)
  In business or commerce, an order is a stated intention, either spoken or written, to engage in a commercial transaction for specific products or services. From a buyer's point of view it expresses the intention to buy and is called a purchase order. From a seller's point of view it expresses the...
  
   matching system for foreign exchange dealers. Examples of such systems are EBS
  Electronic Broking Services
  Electronic Broking Services is a wholesale electronic trading platform used to trade foreign exchange with market making banks...
  
   and Reuters Matching 2000/2
  D2000-2
  D2000-2 was a software system designed by Reuters for Foreign exchange trading.This automated electronic trading system allowed a dealer to enter buy and/or sell prices directly into the system, thereby avoiding the need for a human broker...
  
  .

• Electronic trading systems. Executed via a single-bank proprietary platform or a multibank dealing system. These systems are generally geared towards customers. Examples of multibank systems include FXAll, Currenex, FXConnect, Globalink and eSpeed.

• Voice broker. Executed via telephone communication with a foreign exchange voice broker
  Broker
  A broker is a party that arranges transactions between a buyer and a seller, and gets a commission when the deal is executed. A broker who also acts as a seller or as a buyer becomes a principal party to the deal...
  
  .

See also

• Foreign exchange market
  Foreign exchange market
  The foreign exchange market is a global, worldwide decentralized financial market for trading currencies. Financial centers around the world function as anchors of trading between a wide range of different types of buyers and sellers around the clock, with the exception of weekends...
  
  
• Foreign exchange trading
• Foreign exchange option
  Foreign exchange option
  In finance, a foreign-exchange option is a derivative financial instrument that gives the owner the right but not the obligation to exchange money denominated in one currency into another currency at a pre-agreed exchange rate on a specified date.The FX options market is the deepest, largest and...
  
  
• Financial instruments
  Financial instruments
  A financial instrument is a tradable asset of any kind, either cash; evidence of an ownership interest in an entity; or a contractual right to receive, or deliver, cash or another financial instrument....