What Is Spot Next?
Spot next (S/N) is a term used in foreign-currency trading. It denotes the delivery of purchased currency on a day after the spot date. Spot-next contracts are short term swaps where a currency is rolled out one further day, the next day after spot.
Spot-next is otherwise known as "next business day."
Understanding Spot Next
The price for spot-next deliveries is adjusted for the extra time period. For example, a currency that is bought on Tuesday will have a spot date of Thursday and if it is rolled spot-next it will settle on Friday. The rate will be adjusted depending on the interest rates of the two prevailing currencies. However, as it is just one day after spot the rate of change will be minimal.
Example of Spot Next
For some currency pairs such as the U.S. dollar / Canadian dollar cross (USD/CAD), spot-next will settle two days after the trade date because the spot date is T+1, not T+2. Therefore, a trade in this currency pair that is executed on Tuesday, will have a spot-next settlement date of Thursday.