Spot market: Difference between revisions
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{{Short description|Type of financial market}} |
{{Short description|Type of financial market}} |
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{{More citations needed|date=August 2023}} |
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{{Financial markets}} |
{{Financial markets}} |
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The '''spot market''' or '''cash market''' is a [[market (place)|public]] [[financial market]] in which [[financial instrument |
The '''spot market''' or '''cash market''' is a [[market (place)|public]] [[financial market]] in which [[financial instrument]]s or [[commodity|commodities]] are traded for [[spot date|immediate delivery]].<ref name=":0">{{Cite web |title=Spot Market |url=https://corporatefinanceinstitute.com/resources/capital-markets/spot-market/ |access-date=2023-08-16 |website=Corporate Finance Institute |language=en-US}}</ref> It contrasts with a [[futures exchange|futures market]], in which delivery is due at a later date.<ref>{{Cite web |title=Spot Market Definition {{!}} Britannica Money |url=https://www.britannica.com/money/spot-market |access-date=2023-08-16 |website=www.britannica.com |language=en}}</ref> In a spot market, [[settlement (finance)|settlement]] normally happens in [[T+2]] working days, i.e., delivery of cash and commodity must be done after two working days of the [[trade date]].<ref name=":0" /> A spot market can be through an [[exchange (organized market)|exchange]] or [[over-the-counter (finance)|over-the-counter]] (OTC). Spot markets can operate wherever the [[infrastructure]] exists to conduct the transaction. |
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==Exchange== |
==Exchange== |
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[[Security (finance)|Securities]] (i.e. [[financial instrument |
[[Security (finance)|Securities]] (i.e. [[financial instrument]]s) and [[commodity|commodities]] are traded on an exchange using, making, and possibly changing the current [[market price]]. |
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==OTC== |
==OTC== |
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==See also == |
==See also == |
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*[[Spot date]] |
*[[Spot date]] |
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==References== |
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{{Reflist}} |
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[[Category:Foreign exchange market]] |
[[Category:Foreign exchange market]] |
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Latest revision as of 19:22, 20 August 2023
 | This article needs additional citations for verification. (August 2023) |
The spot market or cash market is a public financial market in which financial instruments or commodities are traded for immediate delivery.[1] It contrasts with a futures market, in which delivery is due at a later date.[2] In a spot market, settlement normally happens in T+2 working days, i.e., delivery of cash and commodity must be done after two working days of the trade date.[1] A spot market can be through an exchange or over-the-counter (OTC). Spot markets can operate wherever the infrastructure exists to conduct the transaction.
Exchange
[edit]Securities (i.e. financial instruments) and commodities are traded on an exchange using, making, and possibly changing the current market price.
OTC
[edit]In the OTC i.e., over the counter market, trades are based on contracts made directly between two parties, and not subject to the rules of an exchange. The contract terms are agreed between the parties and may be non-standard. The price will probably not be published.
Examples
[edit]Energy spot
[edit]The spot energy market allows producers of surplus energy to instantly locate available buyers for this energy, negotiate prices within milliseconds, and deliver energy in a short-term timeframe.[3] Spot markets can be either privately operated or controlled by industry organizations or government agencies. They frequently attract speculators, since spot market prices are known to the public almost as soon as deals are transacted. Examples of energy spot markets for natural gas in Europe are the Title Transfer Facility (TTF) in the Netherlands and the National Balancing Point (NBP) in the United Kingdom.
See also
[edit]References
[edit]- ^ a b "Spot Market". Corporate Finance Institute. Retrieved 2023-08-16.
- ^ "Spot Market Definition | Britannica Money". www.britannica.com. Retrieved 2023-08-16.
- ^ "Energy Markets – Europex". Retrieved 2023-08-16.
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