The market for buying and selling currencies for near-immediate delivery is the spot market.
A spot market, also called a cash market, handles transactions settled as soon as practical rather than at a later date specified by a futures or forward contract. In foreign exchange, “immediate” usually means settlement on the standard spot date, commonly two business days after the trade date. The agreed price is called the spot exchange rate.
Spot currency trading takes place primarily over the counter, through a global network of banks, dealers, brokers, and electronic trading systems rather than on one central exchange. Currencies are traded in pairs, such as EUR/USD or USD/JPY, because buying one currency simultaneously means selling another.
The settlement rule has exceptions. For example, many USD/CAD transactions traditionally settle on the next business day, known as T+1. This is why “spot” should not be interpreted as physical cash changing hands instantly. A futures or forward market instead sets terms today for delivery on a later date, while an options market provides a right rather than an obligation to transact.