Booking a spot contract is buying an amount of currency for a transaction that is going to take place within 1 to 3 days. Spot in the industry usually means a 3 day settlement but a lot of providers will offer you this service on a same day transfer. This means that your beneficiary (whether that be yourself or your supplier) can get the funds in their bank account quickly.
How do I know who to choose?
Spot contracts are undertaken by every broker in the UK and this will make up 70 percent and upwards of the amount of day to day transactions they undertake. There's multiple factors involved in picking the right provider for your spot trades, the first being speed of transfer. Providers will vary on the time it takes them to get your recipient the funds, this can range from minutes to days depending on the currency you are booking and the provider's own internal procedures. Likewise with charges, some providers will charge varying fees on their transactions. Always make sure you are clear on the charges before you go ahead with a provider. Another consideration is the exchange rate differential from what you pay via the provider verses the interbank rate, Again this differential will vary from provider to provider, so make sure you completely understand the fees structure.
Will I be offered different rates for different sized transactions?
This all depends on the provider and the pricing structure that they have in place with you. Some providers will decrease their margin the larger the trade size is, whereas others will keep the margins regardless of transaction size, Our team of experts can help you.
Why don't I use my bank for Spot Transactions?
Banks have traditionally captured the foreign exchange market and clients have had no alternative. This meant that banks could charge high margins and fees. Today, foreign exchange competition in the UK is high with a wide range of different foreign exchange providers to choose from, with more competitive fees and spreads than the banks.
What are the different foreign exchange products?
Whilst the Foreign Exchange market can provide a host of different products to use, the following list shows options that the majority of businesses will use due to their usefulness and accessibility. These include:
- Spot Transactions
- Forward Contracts
- Market Orders
- Multi-Currency Accounts