Spot Contract:
Current Exchange Rate
Spot contracts are the most common foreign exchange products used by NewbridgeFX to transfer our client’s money into a foreign currency. Spot contracts are used by businesses and individuals to make an immediate money transfer, whether that be to pay suppliers for goods and services, paying overseas staff, purchase a property overseas, or emigrate abroad, using the current market exchange rate.
Why Should You Use Spot Contracts?
About:
Spot Contracts
Speak to a specialist at NewbridgeFX to better understand if a Spot Contract could help meet your FX needs.
What are the Advantages of Spot Contracts?
is secure and the funds remitted as soon as your funds are received. Like all financial products, there are advantages and disadvantages that come with them, so using a professional service such as NewbridgeFX who provide tailored customer support, will help you to determine whether to go ahead and book a spot contract, or opt to take a different approach.
The benefits of using spot contracts include:
- Immediate transfer of funds, where, depending on the destination and currency, payments can arrive on the same day. Spot contracts also allow for immediate settlement, ensuring swift transactions at the current market rate.
- Lower capital requirement, where unlike with other FX products spot contracts and transactions don’t require a deposit giving you full flexibility of the payment amounts.
- Ease of transfer, allowing you to take advantage of the current exchange rate and deliver the funds to your beneficiary at a time and rate that suits you.
What are the Disadvantages of Spot Contracts?
If a payment is not required immediately and is set for a future date, then a spot contract may not be the best option. For example, if you place an order for goods from an overseas company that requires payment in two months’ time, using a spot contract to settle the invoice exposes you to the risk of currency fluctuations. That could mean the exchange rate at which you settle the spot contract could have changed by the time you come to book the transaction.
This could mean that the price you pay is higher than it would have been. On the flip side, the markets could change in your favour, but there is no way of knowing and so, you might want to consider other financial products, such as forward contracts or market orders, if your payment requirements are not immediate.
What is the Difference between a Spot Contract and a Forward Contract?
A spot contract allows you to trade immediately at the current spot rate exchange, whereas a forward contract allows you to trade up to 12 months in the future. Where you can secure the exchange rate from the day it’s created, which gives protection if the markets become volatile.
How do I Secure a
Spot Contract
Speak to a specialist at NewbridgeFX to receive a Spot Rate and book your transfer.
1. Secure an exchange rate
Once your account has been created, notify NewbridegFX of your beneficiaries and the currency they need to be paid. We will quote you an exchange rate that is viewable on our online platform or by phone.
2. Transfer funds to a holding account
When you’ve agreed on an exchange rate, we’ll ask you to make a bank transfer to our holding account.
3. Your Money is Converted
Once we’ve received your funds, we’ll convert and send your payment onwards to your beneficiary as a financial instrument. Depending on the currency and the destination, payments can arrive on the same day.
Case Study:
Spot Contract
Example of when a spot contract is used
A property developer needs to make an immediate transfer of funds from British Pounds to €400,000 Euros to make payment for a commercial property in France.
This transaction takes place in the spot market, where financial instruments are traded for immediate delivery, involving the exchange of cash for commodities, currencies, and securities.
The property developer requests a quotation from NewbridgeFX for a spot contract and is provided with a spot exchange rate of 1.180 and a price of £338,983 in British Pounds.
Once the spot rate and price has been agreed, the property developer transfers the funds to a secure holding account. Upon receipt of funds in British Pounds, a payment of €400,000 Euros is made to the beneficiaries nominated bank account and a confirmation is sent to the property developer.
By using NewbridgeFX, the property developer was able to achieve a more competitive exchange rate than what their bank was offering and they weren’t charged fees to make the transfer. They were also provided with additional help to ensure they purchased the correct product for their needs.
FAQ:
Spot Contract:
What is a Spot Contract?
Answer
A spot transaction, also known as a spot contract is an agreement that enables you to buy and sell an asset at the current market rate, or “spot price” or ”spot rate”. Spot contracts are used by businesses and individuals to make immediate money transfers from one currency to another. These transactions can span multiple reasons for transfer, including paying overseas suppliers, purchasing property abroad, paying overseas staff, or moving country.
What is a Spot Rate?
Answer
A spot rate, often referred to as spot prices, is the live market rate between two currencies at which currencies can be bought or sold. The rate will be secure and the transaction settled immediately if you choose to make an immediate exchange. All foreign exchanges using a spot rate must be delivered within two business days.
What are the Advantages of Spot Contracts?
Answer
Spot contracts enable you to secure an exchange rate for immediate onward settlement, the rate is secure and the funds remitted as soon as your funds are received. Like all financial products, there are advantages and disadvantages that come with them, so using a professional service such as NewbridgeFX who provide tailored support, will help you to determine whether to go ahead and book a spot contract, or opt to take a different approach.
A spot trade is crucial in securing current exchange rates for immediate transactions in foreign currency, financial instruments, or commodities.
The benefits of using spot contracts include:
- Immediate transfer of funds, where, depending on the destination and currency, payments can arrive on the same day.
- Lower capital requirement, where unlike with other FX products spot contracts and transactions don’t require a deposit giving you full flexibility of the payment amounts.
- Ease of transfer, allowing you to take advantage of the current exchange rate and deliver the funds to your beneficiary at a time and rate that suits you
What are the disadvantages of Spot Contracts?
Answer
If a payment is not required immediately then a spot contract may not be the best option. For example, if you place an order for goods from an overseas company that requires payment in two months’ time, using a spot contract to settle the invoice exposes you to the risk of currency fluctuations. That could mean the exchange rate at which you settle the spot contract could have changed by the time you come to book the transaction.
A pay now deal, which facilitates immediate delivery through a Spot Contract, allows businesses and individuals to engage in currency trading at current market rates, establishing a contractual obligation to exchange currency on a specified date.
This could mean that the price you pay is higher than it would have been. On the flip side, the markets could change in your favour, but there is no way of knowing and so, you might want to consider other financial products, such as forward contracts or market orders, if your payment requirements are not immediate.
Products:
Manage Risk
NewbridgeFX offers a specialist service in the deliverable foreign exchange market, promoting a range of products and services, available online or over the phone. Our products have been designed to meet the needs of our clients when sending money overseas, and are ways for businesses, and individuals, to manage and mitigate currency risk.
Spot Contract
Lock in an exchange rate to settle immediately. Funds can be received the same day for most currencies.
Forward Contract
Lock in an exchange rate today, but for settlement at a later date that suits you, up to 12 months in the future.
Market Order
We monitor the markets real time and take action to trade between currencies when your desired rate is achieved.
Rate Alerts
Set an alert for phone or email notification when a rate has been achieved to take advantage at the best time.
Products:
Manage Risk
NewbridgeFX offers a specialist service in the deliverable foreign exchange market, promoting a range of products and services, available online or over the phone. Our products have been designed to meet the needs of our clients. These products are ways for businesses, and individuals, to manage and mitigate currency volatility and are used frequently during times of increased currency fluctuations. Alongside up-to-date market news, which works in tandem with our range of products.
Spot Contract
Lock in an exchange rate for immediate onward settlement. Funds can be received the same day.
Forward Contract
Lock in an exchange rate today, but for settlement at a later date that suits you, up to 12 months in the future.
Market Order
We monitor the markets real time and take action to trade between currencies when your desired rate is achieved.
Rate Alerts
Set an alert for phone or email notification when a rate has been achieved to take advantage at the best time.
Testimonials:
NewbridgeFX
We strive to earn the loyalty of our clients by consistently delivering a dedicated, professional foreign exchange service, and focusing on providing a great client experience. We have a vast and varied client portfolio. Our experience and expertise in managing international payments applies across a wide range of industries, from accountants to warehouses.
If you’re looking for an easy and cost effective way to make international payments, this is who you should be using. I’m pleased to say they have saved me, my friends and family money month on month. Someone is always available to talk to and I am kept updated
Having worked with them for sometime now, I’m happy to say they have consistently demonstrated a personal and dedicated level of service above and beyond that offered by my bank and previous provider. Its refreshing to work with a company that really cares about their client. Always recommending to anyone with an FX exposure.
A. Lee
Amazing service, every occasion my funds have arrived on or before the date quoted. They also notify me of market movements which effect my bottom line along with educating me on why the markets react. We currently make a large volume of payments and I have tried a few other providers and nothing compares to the professionalism they offer and I need for my business.
O. Long
Benefits:
NewbridgeFX
Multi Currency Account for Business
Enable your customers pay you in the currency of their choice, without asking them to convert. Receive funds in your company's base currency and any combination of currencies we support.
Create And Manage All Your Beneficiaries
Add and manage your beneficiaries, perform bank account validation & verification checks as you enter your beneficiary details & bulk upload multiple beneficiaries via a CSV file.
Make Fast & Secure Payments To Over 200 Countries
Real time Swift and local payments are settled the same day, within minutes of processing (currency/country dependant), and payment tracking capabilities allow you to keep updated on the payment status.
Multi-Currency Balances
Hold multiple currencies and access balance information in supported currencies. Receive, convert, send and move money between your multi-currency accounts without making payments.
Convert Over 100 Currencies, 24/7, Using Multiple Devices
We provide informative, up to date market news, including updates on currency movements, upcoming economic events and announcements that impact the foreign exchange market.
Real-time Reporting And Tracking
View and track all conversions, payments and incoming funds using our online platform, and receive email notifications when funds have been received, conversions processed and payments released.
Benefits:
NewbridgeFX
Multi-Currency Account In Your Company Name
Receive funds from your customers in to your own named collection account, using one account number for all currencies, or a local in-country account number still in your company name.
Create And Manage All Your Beneficiaries
Add and manage your beneficiaries, perform bank account validation & verification checks as you enter your beneficiary details & bulk upload multiple beneficiaries via a CSV file.
Make Fast & Secure Payments To Over 200 Countries
Real time Swift and Local payments are settled the same day, for most currencies, within minutes of processing. Live GPI Payment tracking capabilities allow you to keep updated on the payment status.
Multi-Currency Balances
Hold multiple currencies and access balance information in supported currencies. Receive, convert, send and move money between your multi-currency accounts without making payments.
Convert Over 100 Currencies, 24/7, Using Multiple Devices
We provide informative, up to date market news, including updates on currency movements, upcoming economic events and announcements that impact the foreign exchange market.
Real-time Reporting And Tracking
View and track all conversions, payments and incoming funds using our online platform, and receive email notifications when funds have been received, conversions processed and payments released.