Forward Settlement Date
The future date when a forward forex contract will settle and currencies will be exchanged.
A forward settlement date is the agreed future date when a forward forex contract settles. Unlike spot's T+2, forwards can settle anywhere from days to years ahead.
A forward settlement date is the agreed-upon future date when a forward foreign exchange contract will be settled. Unlike spot transactions (T+2), forward contracts can settle on any agreed date in the future, from a few days to several years ahead.
How It Works
- Agreed at contract inception
- Can be any business day after spot date
- Standard tenors: 1W, 1M, 2M, 3M, 6M, 1Y
- Non-standard dates are called "broken dates"
Trading Tips
Forward rates include interest rate differentials
Longer dates typically have wider spreads
Match settlement date to your actual currency need
Forward Settlement Date Example
Say you agree today to buy 1 million euros in six months at 1.0900. That date is the forward settlement date. Whatever spot does before then, your conversion happens at 1.0900 on that day.
How Traders Use Forward Settlement Date
Match the settlement date to the real-world payment, not to a round tenor. The further out the date, the more forward points move the rate, so compare two tenors to see what the wait costs you.
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