Currency spot trading is the most popular foreign currencyinstrument around the world, making up 37 percent of the total activity The fast-paced spot market is not for the fainthearted, as it featureshigh volatility and quick profits (and losses). A spot deal consists of abilateral contract whereby a party delivers a specified amount of agiven currency against receipt of a specified amount of anothercurrency from a counterparty, based on an agreed exchange rate,within two business days of the deal date. The exception is theCanadian dollar, in which the spot delivery is executed next businessday.Trading 24The name "spot" does not mean that the currency exchange occursthe same business day the deal is executed. Currency transactions that require same-day delivery are called cash transactions. The twodayspot delivery for currencies was developed long before technological breakthroughs in information processing.This time period was necessary to check out all transactions' detailsamong counterparties. Although technologically feasible, thecontemporary markets did not find it necessary to reduce the time tomake payments.
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