Markets

Spot Contract

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An agreement to exchange one currency for another at an agreed rate, usually for settlement within two working days from the trade date.

How it works

UK-based company Acme Ltd has operational expenses in USD and needs to pay an invoice for USD 500,000. To do so, Acme Ltd executes a Spot Contract:

Variables

Notional amount

Currency pair

Settlement date

Spot rate

Key benefits

Provides a known rate of exchange upfront, giving certainty of cross currency cashflow

Same day delivery is available, to help ensure timely payment

Simple and easy to use

Key risks

Should the contract no longer be required, the cost of unwind will be determined by the prevailing market rate at the time and will be payable by the client

Disclaimer

Where HSBC Innovation Banking markets any foreign exchange (FX) products, it does so a distributor of such products, acting as agent for HSBC UK Bank plc and/or HSBC Bank plc.

If you do transact any FX products via HSBC Innovation Banking, any FX agreement will be with HSBC UK Bank plc or HSBC Bank plc on their terms of business, depending on the nature of the product and the client. You can find a link to the HSBC terms of business here

Any investment products are intended for experienced investors and you should be aware that the value of your investment may go down as well as up. Your capital may be at risk. HSBC Innovation Bank Limited does not provide Investment, Legal, Financial, Tax or any other kind of advice. Before entering into any foreign exchange transaction, you should seek advice from an independent Advisor, and only make investment decisions on the basis of your objectives, experience and resources.