The spot rate is the price of a financial asset or currency on the spot market and is also known as the spot rate or spot price. The opposite of the spot rate is the forward rate.
Definition / explanation
The spot rate is the exact price that has to be paid on the market for a specific good. This also includes the cash register. It denotes the interest rate that is paid if funds are raised or invested in the market at that moment. This depends on the term of the acceptance or decrease of funds.
Due to the different terms, a yield curve can be created from the spot rates. If there is a fixed term for financial investments, the cash value for the investment can be calculated from the cash yield curve, which corresponds to the current spot rate. In the opposite case, the cash rate can be derived from the spot rate for investment forms that are tradable.
Spot rate on stock exchanges
One of the main tasks of the spot price is to designate a mean price for securities on the German stock exchange that are not continuously traded (e.g. due to a lack of liquidity).
In contrast to continuously quoted prices, the spot rate is only updated once a day. This usually takes place at 12:00 or 13:00. The good is traded at the price that is then available. An opening or daily closing account is unnecessary due to the one-time listing.
The point behind the spot rate is that those orders that cannot be executed variably are grouped together and billed together at the spot rate. This is useful for orders that do not meet the minimum number of brokers.
In the meantime, however, it is also possible to trade small quantities variably on the stock market. For this reason, the spot rate has lost its previous meaning.