What is a Spot Market?

The spot market is also called the "cash market" or "physical market", because prices are settled in cash on the point at current market prices; it deals in the current price of a financial instrument.

The spot market may take place in different forms:

1. Self-regulated centralized markets, such as commodity exchanges;
2. Decentralized over-the-counter markets where private transactions may occur; or
3. Localized community organizations, such as grain elevators.

At these locations, you can buy the actual physical commodity rather than just the contracts.