Spot Contracts

Spot Trade

A spot contract is the simplest of all foreign exchange products. It involves the purchasing or selling of currency for immediate settlement on the spot date. A spot trade is done at the current rate at the time you wish to make it and is particularly useful if you need to make an immediate or urgent international payment.

Overview

Spot contracts are particularly useful if you need to make an international payment in an extremely short space of time, as you can deliver the funds to a beneficiary in a timely fashion.

However, using spot contracts without leveraging your exposure with other financial products can be a high-risk strategy. Given how volatile the currency markets can be from one day to the next, it is important to think about the bigger picture.

Different Currencies

Our dedicated team of currency risk management experts are on hand to exchange your money into a variety of different currencies, enabling you to make instant international payments.

Bespoke Strategy

We are passionate about working closely with our clients to deliver a proactive, solution-led service. Our team will work with you to develop a bespoke strategy for managing risk.

Market Movements

We provide professional currency guidance on market movements that helps our clients minimise risk when making foreign currency exchanges.

Spot Contracts vs Forward Contracts

If you have time to spare and want to avoid a scenario where the markets move unfavourably, you could take advantage of a forward contract instead. Forward contracts enable you to reserve a forward price for buying or selling currencies on a specific date in the future. They are a ‘buy now, pay later’ agreement, meaning you avoid any currency fluctuations and know exactly how much you’ll be paying in the future.

A spot contract allows you to trade immediately at the current rate. However, a forward contract can be used to lock in a rate for payments in the future.

The ‘expected future spot rate’ is the currency exchange rate that is expected to take effect at a particular point in the future – this is based on estimations. A forward rate is the current exchange rate that has been locked in to take effect on a future date.