Spot / Contracts
Deliverable spot FX contracts are used by businesses and individuals to make international payments, settle trade transactions, and manage foreign currency risks. Unlike Hedging and forward contracts, a deliver spot FX contract requires the physical delivery of the underlying currency on a specific settlement date (typically two business days are the trade date). While this gives for less flexibility it does allow businesses and individuals to execute trades quickly and capitalise on positive market movements.
These deliverable spot FX contracts are traded on the interbank market, where financial institutions and large corporations trade with each other directly or through electronic trading platforms. This market in particular is primed to allow the quick execution of trades with the most commonly paired currencies being GBP / EUR / USD / JPY / CHF. The best way to use a deliverable spot FX contract is to lock in a specific exchange rate for a future payment or receipt of foreign currency, helping to mitigate the risks associated with currency fluctuations; as always, our team at Sequoia FX will guide you through the process to ensure you’re kept fully informed of the options available to you.
Forward Contracts
Forward contracts are particularly useful for investors and businesses that need to manage their exposure to price fluctuations in the future. For example, a company that imports goods from another country may use forward contracts to lock in a favourable exchange rate and protect against currency fluctuations.
