Date value in Forex





As already mentioned, the Forex market in broad terms includes not only the purchase and sale of one currency for another with calculations at once, that is today, but also at other time intervals.

The settlement date - that is, the date of the physical transfer of funds to counterparty accounts - in the financial language is called the value date (or Value date).


Date value in Forex


Usually, the following value dates are used in the financial market:

  • Today (Tod) - settlements are made today, on the transaction day
  • Tomorrow (Tom) - settlements are made on the next working day after the transaction day
  • Spot - calculations are made on the second working day after the day of the conclusion of the transaction.
Note: all transactions concluded with the settlement date before the second business day are called cash conversion operations.

Note: The day of the conclusion of the transaction is the day in which the agreements were made with respect to the main parameters of the transaction:

  • the definition of the actions of the parties (purchase-sale);
  • the name of the currency being bought and sold;
  • the amount (volume) of the transaction;
  • the exchange rate of the transaction (transaction rates for SWAP type transactions ) ;
  • Value date ( value date for a SWAP type transaction ) ;
  • payment instructions of counterparties;

The Forex market also uses transactions with a value date that is more than 2 business days from the date of the transaction - they are called forward transactions or urgent conversion operations. Value dates are agreed at the time of the transaction.

Derivative financial instruments such as options are also traded on the Forex market.

There are two types of options:

  • an American option is the right (but not the obligation) of a buyer to buy or sell a base asset at a specified price before the expiry of a certain date.
  • The European option is the right (but not the obligation) of the buyer to buy or sell the underlying asset at a certain price on a certain date.

Depending on what the right arises when buying an option, buy or sell the underlying asset, allocate respectively the Call and Put options.

The most popular in the Forex currency market are transactions conducted on Spot terms. Usually, this is due to the need for time to process and settle accounts with a counterpart located in a different time zone.





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