Spot market?qsrc=3044

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The spot market or cash market is a public financial market, in which financial instruments are traded and delivered immediately. The spot market can be of both types:

• an organized market, an exchange or
• "over the counter", OTC.

Spot markets can operate wherever the infrastructure exists to conduct the transaction. The spot market for most instruments exists primarily on the Internet.

Exchange

Securities (i.e. commodities) are traded on exchanges using recent market price.

OTC

Non or less standardized contracts, i.e. forwards or swaps, have no publicly known recent price, so set uniquely each time.

Examples

Spot Forex

The spot foreign exchange market has a 2 day delivery date, originally due to the time it would take to move cash from one bank to another. Most speculative retail forex trading is done as spot transaction on an online trading platform.

Energy Spot

The spot energy market allows producers of surplus energy to instantly locate available buyers for this energy, negotiate prices within milliseconds and deliver actual energy to the customer just a few minutes later. 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.

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