When does delivery occur on a spot contract? What will be an ideal re

When does delivery occur on a spot contract?

What will be an ideal response?

ANSWER

Answer: When currencies in the interbank spot market are traded, certain business conventions are followed. For example, when the trade involves the U.S. dollar, business convention dictates that spot contracts are settled in 2 business days–that is, the payment of one currency and receipt of the other currency occurs in 2 business days. One business day is necessary because of the back-office paperwork involved in any financial transaction. The second day is needed because of the time zone differences around the world.