Bank value dating

Bank value dating

The value date can

The value date is usually, but not always, the settlement date. Two parties in a business contract who explicitly agree in writing that an effective date for the contract can be made at a date prior to the current one. The date the funds are released is referred to as the value date.

In Forex trading, the value date is regarded as the delivery date on which counterparties to a transaction agree to settle their respective obligations by making payments and transferring ownership. The value date can fall on any day as seen when calculating accrued interest which takes into account every day of a given month. The value date is also used when evaluating coupon bonds that make semi-annual interest payments.

If the payee has access to the funds immediately, the receiving bank runs the risk of recording a negative cash flow. In effect, the bank will post the amount of the deposit for a couple of days, after which the payee can use the funds.

The trade date is the date on which a transaction was executed. Backdating, in this case, may be useful as the parties, who have already begun acting on the agreement, finish the final details of the written contract. The value date is the day that the currencies are actually traded, not the date on which the traders agree to the exchange rate.

The settlement date is the date on which a transaction is completed. If allowed, up to six-month backdating would apply as long as the buyer pays for that time period. Due to differences in time zones and bank processing delays, the value date for spot trades in foreign currencies is usually set two days after a transaction is agreed on. The insurance company may or may not allow backdating depending on the state where the person lives. Similarly, a person who wants to buy health insurance and make it effective beginning at a date prior to the current date.

In Forex trading the value