Resource Center : The Basics of a Spot Transaction

A spot transaction refers to an exchange of currencies at the prevailing market rate. For most currencies, a spot transaction consists of a two day settlement period.

Example:

A European would like to purchase a home in the US, and will need to fund their USD account for the transaction. They will need the funds in two days, so they book a spot transaction today thereby locking in the rates at which the two currencies will be exchanged. In two days time, they transfer the required EUR's to the counterparty and receive the USD into their account.