Forward

A forward contract or simply a forward is an agreement according to which one party (seller) is obliged to sell an underlying asset at a certain future time for a certain price agreed today. Forward can be divided into 2 types: deliverable and non-deliverable forwards.

Non-deliverable forwards is not executed at the moment the asset is delivered.

Deliverable forwards is executed when the asset is delivered and fully paid according to the contract conditions. Forward off-exchange trade is an example of deliverable forwards.

Open date forward - is a forward contract in which the execution date is not set.

Forward price - is a current price of forward contracts on underlying assets.

Spot

Spot contract have such terms of payment, under which the paying is executed immediately (during 2 days).

Spot contracts are executed at different exchanges and at non-exchange market: commodity, stock and currency markets.

Authorized banks can buy or sell foreign currency and set payment delivery for such contracts not later than 2 banking days from the date of conclusion. This kind of contracts is called spot currency contracts, and the operations are performed under spot conditions. Spot currency contracts include 3 purchase and sale types:

1) on the day of transaction. Such contracts and fixed rate are called TOD (today).

2) on the next banking day. Such contracts and fixed rate are called TOM (tomorrow).

3) on the second banking day. Such contracts and fixed rate are called SPOT.