Buy Spot FX – Currency Spot Transactions

By 
Matt Di Vincere (Chief Editor)
Last Edited Dec 03, 2022

Spot FX Trading (FX transfer) is the number one tool for conducting foreign exchange transactions. Being the most widely used product by our readers we will importantly run through our most recommended spot contract providers here. We will also delve into a more precise definition of spot trading to better understand its settlement time, explain what the FX spot rate, as well as the advantages and disadvantages of Spot FX Trading.  Last but not least is recommendations on which providers to use in order to buy (book) a Spot FX trade.

 

What is Spot Trading?

In short, a Spot FX Contract is for you if you require an instant transfer from one currency to another using the current exchange rate.

In FX, spot trading is a purchase of one currency for another, that is due for immediate settlement. Hency it is referred to being traded ‘on the spot’. Spot Trading is the most simple and common form of FX trades conducted by individuals and businesses alike. 

Looking Deeper at the Definition of Spot Trading in FX for ‘Immediate Settlement’

We can gain a clear and precise understanding of what an fx spot transaction is in the foreign exchange market by following newly developed MiFID II guidance. An EU directive implemented in the UK by the FCA.

MiFID II standing for the Markets in Financial Instruments Directive, is a set of guidelines established in 2017 that all fx money transfer companies had to adhere to, with a particular focus on its treatment of forward contracts. It was built on the original MiFID directive established in 2007 and required making a clear separation between an FX spot deal and an FX forward deal.

As had already been largely accepted in the market it allowed for a T+2 settlement on spot deals. So once an FX spot contract is agreed the user has up to 2 working days to settle and complete the trade. Any greater than this and the trade would be regarded as as a forward, thus requiring a completely different set of regulations to adhere to. 

What is an FX Spot Rate?

The FX spot rate is the live foreign exchange rate between two currency pairs and displays the current rate at which one currency can be traded at spot with another. As both currencies value consistently changes based on a number of social, economic and political factors the FX spot rate literally changes by the second. 

Current Pound Vs Euro Rate:

1 Pound is €1.1719 EUR

50 Pounds are €58.5942 EUR

100 Pounds are €117.1884 EUR

1,000 Pounds are €1,171.8836 EUR

2,000 Pounds are €2,343.7672 EUR

10,000 Pound are €11,718.8359 EUR 

1 Euro is £0.8533 GBP

50 Euro are £42.6664 GBP

100 Euro are £85.3327 GBP

1,000 Euro are £853.3271 GBP

2,000 Euro are £1,706.6542 GBP

10,000 Euro are £8,533.2708 GBP 

The FX spot rate is the most widely quoted currency rate in the market and (providing it is a free floating currency) is often seen as a result of the economic conditions in each respective country. Unlike a forward contract it makes a direct comparison in the value of two currencies at the current time, as opposed to a predicted view in the future. Traders, and their demand to either buy or sell a currency, will ultimately determine what a currency is worth. When more of a currency is bought, the currency will increase in value, when more of a currency is being sold, the currency will lose its value.

As explained in our how long does a money transfer take guide, the general process when using an international money transfer company is that when a client books an FX spot transaction with an international money transfer company that company then books the exact same FX spot trade with their banking counterparty. The difference between the spot rate they achieve from the bank and the spot rate offered to its client is the spread the broker takes and is often a better spread than if the client when direct to the bank themselves.

How to Buy a Spot FX Contract

#1
UK Moneycorp: Highest Level of Credibility, Best Business FX Overall
Headquarters:
Zig Zag Building, 70 Victoria St, Westminster, London SW1E 6SQ
99.4% Editorial rating
7,000 Client Reviews
Minimum transfer:
£250 or equivalent
Why Them?
  • Operating Since 1979 - First Commercial FX Firm
  • Corporate FX Specialists
  • Great Online Platform, Tailored for SMEs
  • Many Consumer and Business Awards
  • Widest Selection of FX Hedging Tools
  • Best Credit Score by D&B
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1
Moneycorp
Moneycorp: Highest Level of Credibility, Best Business FX Overall
99.4%
Editorial rating
#2
UK Currencies Direct: Excellent Service and Very Functional Online System
Headquarters:
1 Canada Square, Canary Wharf, London E14 5AA
97.8% Editorial rating
7,500 Client Reviews
Minimum transfer:
£100
Why Them?
  • Large Transfers and Bespoke Business Transfer Specialists with 4.5/5 Rating on TrustPilot (5,000+ Reviews)
  • Industry Leader with £10bn in Annual Turnover
  • Batch Payments and Forward Contracts Online
  • Risk Management including Rate Alerts and Forwards
  • Most Global Offices in the Industry
  • Easy On-Boarding Process
  • No Transfer Fees and Great Rates
  • Accepts Private Clients and Business Clients of Any Requirement
  • Smooth Online and System
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2
Currencies Direct
Currencies Direct: Excellent Service and Very Functional Online System
97.8%
Editorial rating
#3
UK TorFX: Friendliest Business Currency Broker in the Industry
Headquarters:
St Mary's Terrace, Penzance, Cornwall, TR18 4DZ
93.2% Editorial rating
5,500 Client Reviews
Minimum transfer:
£1,000
Why Them?
  • Personal, Friendly Service
  • High TrustPilot Rating
  • Regular Market Updates
  • Expert Guidance by Veteran Dealers
  • Excellent Hedging Offering for Businesses
  • Property Transaction Specialists
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3
TorFX
TorFX: Friendliest Business Currency Broker in the Industry
93.2%
Editorial rating
#4
UK Global Reach Group: Excellent Client Feedback, Friendly & Professional
Headquarters:
Woolgate Exchange, 25 Basinghall St, London EC2V 5HA
90.6% Editorial rating
1,000 Client Reviews
Minimum transfer:
£1,000 or equivalent
Why Them?
  • 99% Positive Customer Feedback
  • Known for Great Currency Guidance
  • Highly Usable and Friendly Website
  • Operating for 15+ Years
  • Result of a Merger of two Leading Companies in the Money Transfer Space, One was Fully Dedicated to Corporate Foreign Exchange
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4
Global Reach Group
Global Reach Group: Excellent Client Feedback, Friendly & Professional
90.6%
Editorial rating
#5
Australia OFX: Best Online System for Business FX, Publicly Traded
Local UK Offices:
The White Chapel Building, 10 Whitechapel High St, London, E1 8QS
90.4% Editorial rating
1,500 Client Reviews
Minimum transfer:
£100 or equivalent
Why Them?
  • Traded Publicly on the Australian Stock Exchange
  • Massive Staff
  • Spotless Reputation for 20 Years
  • Ultra Professional System with High Level of Functionality
  • Very Tight Margins
  • Transparent Rates on the Online System
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5
OFX
OFX: Best Online System for Business FX, Publicly Traded
90.4%
Editorial rating
#6
UK Halo Financial: Excellent Currency Predictions
Headquarters:
Battersea Studios 2, 82 Silverthorne Rd, Nine Elms, London SW8 3HE
87.3% Editorial rating
100 Client Reviews
Minimum transfer:
£1,000
Why Them?
  • Feefo 2020 Platinum Trusted Provider
  • Excellent Website and Online Flow
  • Highly Professional
  • 15+ Years of Experience
  • Spot-On Currency Predictions
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6
Halo Financial
Halo Financial: Excellent Currency Predictions
87.3%
Editorial rating

What Are The Advantages to Spot Trading?

Probably the biggest advantage to booking an FX spot contract is its simplicity. Providing you pay within the settlement period the rate you’ved booked is guaranteed and it allows for a near immediate exchange of currencies. If you have an invoice in another currency that needs to be paid immediately then a spot FX trade will be the most appropriate.

 

What Are The Disadvantages of Spot Trading?

Spot trading is very restrictive as it only allows for the immediate settlement of an FX spot contract. Individuals and businesses who often have forex requirements are likely to need a greater variety of solutions to better hedge their foreign exchange strategy. For example, if you know you have an invoice to be paid in a months time or the final payment date for the completion of a house you are buying abroad, a forward contract would allow you to guarantee today’s rate for a point in the future. If currencies move severely, such as to the extent the FX spot value of GBP fell in 2016 after the Brexit vote, it may mean you could no longer afford to make your payment in the other currency if you had waited to complete a spot trade at the new FX spot rate.

Should I use a Spot FX Transaction? How to buy Spot FX?

In summary, spot trading should be the first port of call for users looking to gain a better understanding of the fx market. The daily spot forex market is still the largest financial market in the world and is the backbone of foreign exchange by allowing users to quickly trade between currency pairs on the spot. Its lack of flexibility however leaves users at the mercy of the currency markets and the spot rate achievable today could vary greatly to the spot rate achievable in the future.

For most international businesses and frequent individual FX traders, spot trading should be regarded as just one tool to a more comprehensive currency strategy. Readers can also read our guide to forward contracts here as well as our comprehensive summary of a number of FX hedging tools. Whether to buy a Spot FX or not, depends on the needs, requirements and current rates.

Best Providers to Buy Spot FX Trades From

currenciesdirecttable1
  • Min Transfer: £/€/$ 100
  • Currencies Supported: 39
  • Offices : UK, EU, USA, India, UAE and South Africa.
  • Client Satisfaction Rating (Aggregated):
    94.1%
  • Most Worldwide Offices
    Great Rates
    Highest Editorial Rating
grgsmall-1
  • Min Transfer: £/€ 1,000
  • Currencies Supported: 138
  • Offices : UK, Cyprus, and South Africa.
  • Client Satisfaction Rating (Aggregated):
    96.2%
  • Service Oriented
    Loved by Clients
    No Fees on Transfers
worldfirst-200x55-box
  • Min Transfer: £/€ 1,000
  • Currencies Supported: 121
  • Offices : UK, EU, Australia, Hong Kong and Singapore.
  • Client Satisfaction Rating (Aggregated):
    92.9%.
  • Large Trading Volumes
    Easy to Sign Up
    Transparent Exchange Rates
Types of transactions supported by Business Foreign Exchange specialist firms:
  1. Spot FX
  2. Multi-Currency Accounts (receiving business FX payments)
  3. Forward Currency Contract
  4. FX Swap
  5. FX Limit Order
  6. Other Hedging Tools
  7. FX risk management and treasury services
  8. In some cases, and only for hedging purposes those hedging tools include FX Options.