Spot Market

In trading, the term spot market is used synonymously with the term cash market. It denotes the market price at which securities can be bought or sold at any given time.

Transactions on a spot market are known as spot trades. In spot trades, cash being exchanged for assets or, in some cases, assets are exchanged for assets as soon as the contract is formed and the terms of the trade are decided. Delivery of the cash and assets comprising a spot trade either occurs immediately, or within the settlement period of the exchange through which the contract is created. In any case, the transaction is governed by the contract which applies as soon as it is created.

This separates the spot market from the futures market, in which transactions occur at some point after contracts are created and the terms of the trade are decided.

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