Forex glossary
Settlement and value date
Settlement is the payment or delivery required by an agreed trade. Many FX spot pairs use T+2, with exceptions and both currencies' calendars affecting the date. A CFD can settle in cash without currency delivery; its exposure-carrying and financing mechanism comes from product terms.
Illustrative example
How does it work in practice?
Suppose a currency agreement made on Monday provides for delivery of 1,000 EUR against 1,100 USD on Wednesday. Agreeing the trade on Monday and making the payments on Wednesday are separate events.
A case to work through
A weekend before delivery
Model: Friday trade, T+2 convention, no holidays; both currency calendars count business days.
- The next business day is Monday.
- The second is Tuesday; Saturday and Sunday are not counted.
What follows? Establish calendars and convention before planning payment.
Example boundary: These are simplified assumptions; not every pair or product uses T+2.
A useful distinction
Settlement and value date / Order execution
Execution concludes the trade; settlement fulfills its payment or delivery obligations.
Check your understanding
Separate trade date from the agreed delivery date.
Show the answer and explanation
Monday
Friday is the first business day and Monday the second.
Products, delivery and financing calendars
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Read the fuller explanation
Related terms
Sources and documentation
- BCBS/BIS: Foreign exchange risks — Basel Consolidated Guidelines, RMA20
The guidelines define a wholesale FX swap as a currency exchange combined with a reverse exchange with the same counterparty at a later date.
Document read: - CME EBS: value-date calendar
Settlement dates and currency calendars for the stated service; T+2 exercises use explicit assumptions.
The example illustrates the mechanism. Check current account conditions and instrument specifications with the provider.