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Get startedA ‘buy now, pay now’ deal for immediate delivery, a Spot Contract is the most basic foreign exchange product. Any business or individual can use this product to buy and sell a foreign currency at the current market exchange rate. You can have a currency trader book a trade for you or, using an online system, search for the best available rate and book it yourself.
Once currency pairing, amount and currency exchange rate have been confirmed, a contract is automatically drawn up. This becomes a binding obligation to buy or sell the currency agreed upon.
The date of trade is the day on which the contract is agreed and the settlement date is the day on which funds are physically exchanged and delivered into the account of choice. If the base currency funds are received before the daily cut-off time the settlement date will be the same or next working day, unless requested otherwise.
At Trade Finance Global, our team can not only assess and advise your business on currency solutions for your business, but also suggest the most appropriate financing mechanism, working with currency experts and financiers to help bridge the gap in your supply chain, and help you exchange money in different currencies.
A Limit Order can be set when a company does not need to make international payments at a specific time, which gives it the opportunity to wait until a specific exchange rate is reached. Once this has been reached the order will be filled, and occurs 24 hours a day.
A Stop Loss is an ordering tool that allows firms to purchase currency if the rate hits a level that they do not want to go below. Some organisations prefer to wait and see what the market will do. This allows for a minimum level before the order is filled.
The below is the convention for sterling (GBP) versus the euro (EUR). Going by the exchange rate equation above, it costs EUR 1.000 to buy 0.800 GBP, and GBP 1.000 (1 ÷ 0.8000) to buy EUR 1.2500.
The London Based Company acquired top garments from fashion shows and sales events around the world. It was necessary for the business to execute trades to pay suppliers immediately, therefore a spot contract helped the company purchase clothing in bulk efficiently and immediately.