What happens in a spot trade for foreign exchange?

In a spot trade for foreign exchange, the foreign currency is delivered in two business days. This timeframe is standard in the foreign exchange market for the majority of currency pairs, with the transaction being settled on what's known as "T+2," meaning transaction date plus two business days. This practice is rooted in the need for clearing and confirmation processes, allowing both parties to ensure the legitimacy of the trade and settle accordingly.

This delivery timeframe provides a reliable structure for traders and institutions engaging in foreign exchange, making it easier to manage currency risk and liquidity. The clarity of T+2 also facilitates planning and operational processes for businesses needing to convert currencies for import or export, ensuring they can access funds in a timely manner.

The other options either misstate the typical delivery processes in spot trades or describe scenarios that do not apply to spot trades, which adds to the importance of understanding the standard practices within forex trading.