Value date. Also known as the maturity date, it is the date on which counterparts to a financial transaction agree to settle their respective obligations, ie exchanging payments. For spot currency transactions, the value date is normally two business days forward In forward or future contracts a value date outstands from contract date for more than two business days. Numerous variations of forward, future, option and swap contracts are traded on Forex market. All of them presume currency exchange under rate, agreed today, with 01/08/ · In Forex trading, the value date is regarded as the delivery date on which counterparties to a transaction agree to settle their respective obligations by making payments and transferring ownership
A spot transaction is a bilateral agreement to exchange one currency against another currency. When you engage in a FX spot transaction, you agree to the terms here and now. The actual transaction, however, is not settled until one or two business days after the trade date, depending on which currency pair is traded.
So, why doesn't a spot transaction settle on the trade date? Well, for the same reason GBPUSD is called "a cable"; it is all down to history. In older times, before the age of computers and fast telecommunications, everything in banking was processed and executed manually. So was the case for trading foreign exchange. To process, execute and deliver all sorts of trades the counterparties dealt with during a trading day required a fair amount of time and effort.
With some currency pairs the processing time was one business day, but most of the time it took two days to settle a trade. This tradition has stuck over the years, and the market still adheres to these rules. However, value date in forex, old market conventions prevails.
Business day is key to assessing when the transaction will settle. If you do a EURNOK spot trade on a Friday, the value date is two business days counting from Friday. This means that the funds will settle on the Tuesday after, value date in forex. Likewise, if one of the currencies country of origin has a bank holiday between the trade date and the value date, the transaction will settle a day later than it otherwise would have.
With Just FX Analytics you can track live spot rates between all G10 currencies in millisecond resolution to make real-time trade decisions before each value date in forex. Use Just FX Analytics to save cost and increase transparency and efficiency of your FX operation, and get deeper insight into the settlement of your value date in forex. Click here to book a 30 minute demo with one of our FX Experts.
Value dates in FX. The what, why and how. Here are some examples of currency pairs and their corresponding value dates: 1. With Just FX Analytics you can track live spot rates between all G10 currencies in millisecond resolution to make real-time trade decisions before value date in forex trade: Use Just FX Analytics to save cost and increase transparency and efficiency of your FX operation, and get deeper insight into the settlement of your trades. Click here to get in touch with sales Click here to book a 30 minute demo with one of our FX Experts.
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Forex Options 2 - Intrinsic Value \u0026 Time Value
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In forward or future contracts a value date outstands from contract date for more than two business days. Numerous variations of forward, future, option and swap contracts are traded on Forex market. All of them presume currency exchange under rate, agreed today, with Value date. Also known as the maturity date, it is the date on which counterparts to a financial transaction agree to settle their respective obligations, ie exchanging payments. For spot currency transactions, the value date is normally two business days forward What is a Value Date? Value Date Definition. A Value Date, or maturity date is the date on which counterparties to a financial transaction agree to settle their respective obligations by exchanging payments and ownership rights. The typical Value Date for a Spot forex trade is two business days
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