Value Date

There are several definitions of value date, as its use varies in different sectors.

In finance, the value date is also known as the maturity date and refers to a future date when the value of a fluctuating product is determined. This term is normally used in the case of payments in which there will probably be discrepancies in the value (of an asset) due to differences in timing, such as foreign exchange transactions, forwards or options contracts.

In banking, the value date is the delivery date of funds traded. For example, when a bank receives a cheque, the bank will immediately credit the funds to the customer’s account, although the cash has not yet been received. To cover the gap between receiving the cheque and receiving the cash, the bank sets a value date of 1 day’s or 2+ days’ float, which is the period during which the customer will be unable to withdraw the funds received.

In FX markets, the value date refers to the date when the trade is expected to be settled. For spot transactions, the most common value date is two days after the transaction was agreed. In the case of FX forward transactions, the value date refers to the date agreed between the two parties for the mutual delivery of the funds. This date can be weeks, months or, in some cases, even years after the contract has been signed.