The FX spot market refers to the segment of the foreign exchange market where currencies are traded for immediate delivery, typically settled within two business days. In a spot transaction, the exchange rate at the moment of the trade is called the spot rate, and the transaction involves the immediate exchange of one currency for another.

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Key features of the FX Spot Market:

• Immediate Settlement: Trades are settled "on the spot," usually within 2 business days, depending on the currency pair.
• Spot Rate: The price at which the currency is exchanged in the market at that moment.
• Physical Delivery or Transfer: The actual exchange of currencies happens at the agreed-upon spot rate.
• Market Liquidity: It’s one of the most liquid markets in the world due to the global nature of currency trading and it's enormous size.

In the spot market, traders can buy or sell currencies directly, unlike in futures or options markets, or when purchasing or selling an FX forward which involve agreements for future delivery.

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