What is Settlement/Value date?


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Settlement / Value date :
Interbank Foreign exchange transactions do not involve any pre / post payment of either
currency. In all sale / purchase transactions the two currencies are always exchanged on
the same calendar date but at two different times. The time difference is due to time –
zone factors. This concept is called the Principles of Compensated Value.

Contract date – The date on which the two counter parties to a foreign exchange contract
agree to the currencies to be bought / sold, the rate of conversion, the amount and the
settlement date is called the contract date Represented as ‘C’.
The settlement of any transaction takes place through transfers of deposits between the
two contracting parties. The date on which the actual transfer / exchange of currencies
takes place is called the settlement date or the value date.


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MT UVA BMS

MT UVA- University, Vocational and Affiliated Education for BMS

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