A spot to FORWARD SWAP IN WHICH THE PURCHASE OR SALE OF a SPOT EXCHANGE IS accompanied BY THE SALE or purchase OF the same forward exchange.
It’s the most common form of swap.
There are two types of spot-to-forward swap transactions depending on the participants. One type is pure swap transactions, which involve only two parties, that is, all between a bank and another bank or corporate customer.
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The other is a decentralized swap, which involves three participants, in which the bank trades with one party at the spot and another party at the forward.
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In any case, banks are still in effect trading both spot and forward, which is characteristic of a swap.
The point of such trades is to avoid risk and profit from the changes.
