Spot value date
Also written Spot date · Spot settlement date
The settlement date of a standard spot FX deal — the second business day after the trade, provided both currency centres are open; earlier dates are cash (T) and tom (T+1).
In plain language
A foreign exchange trade is agreed on one day and settled — currencies actually change hands — on another. The trade date is when the parties agree; the value date or settlement date is when the money moves.
A "spot" deal sounds immediate, but in FX "immediate" can mean up to two days. The workbook lays out the ladder:
| Name | Settles on |
|---|---|
| Cash (ready) | Same day — T |
| Tom | Next business day — T+1 |
| Spot | Second business day — T+2 |
| Forward | Any date after spot — standardised as 1 month, 2 months, etc. after the spot date |
The spot value date is the most important. Cash and tom rates are derived from the spot price rather than traded in their own right.
How it works
The precise definition. Spot value date is settlement on the second business day, subject to both centres being open on that day. An FX trade settles in two financial centres — one for each currency — and they may have different holidays. If either centre is closed on T+2, settlement moves to the next day on which both are open, which could be the third or fourth day after the trade.
Before spot. Settling earlier than spot is possible, but at a price derived from the spot price: the cash rate for T and the tom rate for T+1.
Indian specifics.
- Interbank cash, tom, spot and forward USD-INR transactions are settled by CCIL through multilateral netting.
- FEDAI market hours for FCY/INR are 9.00 am to 5.00 pm IST; value cash transactions can be done only up to 5.00 pm, except for individuals.
- Spot date roll-over for FCY/INR transactions happens at 12.00 midnight IST.
- Saturday is not a working day for FX business, except for certain individual transactions.
- For FBIL's overnight forward premium, Cash-Tom trades up to 12 noon are used.
Why the paper cares. A foreign exchange derivative contract, under the FEMA regulations quoted in Chapter 2, is one settled on any date later than the spot settlement date.
A worked example
Illustrative dates. The holiday is hypothetical.
An importer in Mumbai buys USD against INR on Monday.
Normal week:
| Deal type | Value date |
|---|---|
| Cash | Monday (T) |
| Tom | Tuesday (T+1) |
| Spot | Wednesday (T+2) |
| 1-month forward | One month after Wednesday |
Week with a US holiday on Wednesday. Mumbai is open, New York is closed. T+2 fails the "both centres open" test.
Spot value date moves to Thursday (third business day after trade)
Week with a US holiday on Wednesday and an Indian holiday on Thursday. Neither day has both centres open.
Spot value date moves to Friday (fourth business day after trade)
Pricing the cash deal. Illustrative quote. If spot USDINR is 83.2000 and the cash-spot difference makes the cash rate 83.1850, an importer buying USD 50,000 for value today pays:
50,000 × 83.1850 = Rs 41,59,250
The 83.1850 is not separately traded; the bank derives it from spot.
Why NISM asks about it
Chapter 1, section 1.3.10 (Settlement date and Value date), defines cash, tom, spot and forward with the timeline, and the two-centre rule for spot. Section 1.3.6 gives the FEDAI market timings and midnight spot roll-over; section 1.3.9 uses Cash-Tom trades for the FBIL overnight premium. Chapter 2, section 2.3, defines a foreign exchange derivative by reference to the spot settlement date. Expect questions on T, T+1 and T+2, and on what happens when a centre is closed.
Common exam traps
- Spot = T+2 business days, not calendar days, and only when both centres are open.
- Tom = T+1; cash = T. "Tom" is short for tomorrow.
- Cash and tom rates are derived from spot, not independently traded prices.
- A forward is anything settling after the spot date — and the forward tenors are counted from the spot date, not the trade date.
- Spot date roll-over is at midnight IST, not at 5 pm.
- A FEMA "foreign exchange derivative contract" settles later than the spot settlement date — a spot deal is not a derivative.
Check yourself
1.In the forex market, the "spot" value date normally means settlement:
- a)On the same day as the trade
- b)On the second business day, subject to both centres being open on that day
- c)On the next business day after the trade
- d)One month after the trade date
Show the answer
Answer: (b) On the second business day, subject to both centres being open on that day
The most important value date is the "spot" value date, which is the settlement after two business days.
And the qualification matters: the correct definition of spot value date is settlement on the second business day, subject to both centers being open on that day. If one of them is closed, then the settlement will be on the next business day (which could be third or fourth, etc., after the trade date) on which both centers are simultaneously open.
Both centres — not just the domestic one.
Option A describes cash: ready or cash transactions are to be settled on the same day.
Option C describes tom: Tom stands for the delivery of foreign exchange to be made on the business day next to the date of transaction.
Option D describes a forward: any settlement dates after spot value date is called "forward" value dates, which are standardized into 1-month, 2-month, etc. after spot value date.
Spot is the anchor and the others are derived from it: the price at which settlement takes before the spot date is a derived price from the spot price and is not a traded price. For a currency pair for which spot date is T+2 and if settlement happens on the trade date, the settlement price is called the "cash" rate and if happens one day after trade date, the price is called the "tom" rate.
One Indian-market detail affects the count: for the purpose of Foreign Exchange business, Saturday will not be treated as a working day except for individual transactions per a bank's internal policy.
And the underlying distinction: the trade date is the day on which both parties agree to buy and sell. The settlement date/value date is the day on which currencies are actually transferred.
Where this is taught
Free preparation for NISM Series IRelated terms
- Cash and tomThe two pre-spot settlement dates in the FX market: cash (or ready) settles the same day, tom settles the next business day, and both their rates are derived from the spot price rather than traded.
- FBIL reference rateThe daily USD/INR (and EUR, GBP, JPY vs INR) benchmark rate published by Financial Benchmarks India Pvt Ltd around 1.30 pm; it is the final settlement price of INR currency futures and options.
- FEDAIThe Foreign Exchange Dealers' Association of India — a self-regulatory body of banks dealing in foreign exchange, set up in 1958 and incorporated under Section 25 of the Companies Act, 1956.
- Foreign exchange forwardAn OTC derivative involving the exchange of two currencies on a specified future date more than two business days away, at a rate agreed on the date of the contract.
- CCILThe Clearing Corporation of India Ltd, the central counterparty that guarantees settlement of government securities, repo and OTC interest rate derivative trades by novation.
- Card rateThe rate a bank fixes at the start of the day for buying and selling foreign exchange from retail customers, applied regardless of intraday movement in the currency.
- FX-RetailThe electronic platform for buying and selling foreign exchange by retail customers of banks, introduced by the RBI in 2019 and rolled out by CCIL on 05 August 2019 to make retail forex pricing transparent.
- NOOP limitThe cap the RBI framework places on a bank's net overnight open foreign exchange position — fixed by the bank's own board, reported to the RBI, and not exceeding 25% of its total Tier I plus Tier II capital.
- Foreign exchange derivative contractUnder the FEMA regulations, a financial contract that derives its value from a change in the exchange rate of two currencies, at least one of which is not the rupee, and settles later than the spot date.