How long does a 'spot trade' typically take to settle?

A spot trade typically settles in two business days, which is standard practice in the foreign exchange market. This timeframe is defined as T+2, where the “T” stands for the transaction date and the “+2” indicates that settlement occurs two business days later. The two-day settlement period allows sufficient time for the transfer of funds and confirmation of the transaction between the parties involved.

While certain types of trades might have different settlement periods, such as securities or derivatives which can vary based on market regulations or the specific agreement between parties, spot trades in currencies predominantly adhere to the two business day convention. Thus, the two-day settlement period is a crucial aspect that provides clarity and consistency in how spot trades are executed in global markets.