A spot market is the market where securities, shares etc are traded on the spot. A spot market can be Stock exchange like BSE, NSE, Over The Counter. Contrary to spot market is the future market, where financial instrument, financial securities or commodities are traded at a future date. In Spot market, financial market instruments settlement is done within t+2 days of trading.
The benefits of Spot Market trading are as follows
i. Easy to operate
ii. Less transaction fees
iii. Easy access to share markets
Some of the terminologies used in Spot Market
i. Spot Date – The date at which settlement of the transaction is done
ii. Spot price – The price at which trading is done between the buyer and seller.
iii. Value Date – The date on which trading is done between buyer and seller at a fixed price on which both the parties agreed upon and make a contract.
iv. Spot Contract – The agreement between two parties: buyer and seller stating all the details of transaction.
Hence, this concludes the definition of Spot Market along with its overview.
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