FX settlement
FX settlement is the final step of a foreign-exchange transaction: the actual exchange of the two currencies, with each party delivering the currency it sold and receiving the currency it bought. For businesses, it is the step where a cross-currency payment picks up its real costs — the spread over mid-market, the settlement lag (spot FX conventionally settles in two business days, "T+2"), and settlement risk if one side pays out before receiving the other.
By Nikhil Srinivasan, Founder & CEOLast updated July 2026
The classic failure mode is called Herstatt risk, after a 1974 bank failure: one party delivers its currency and the counterparty collapses before delivering the other side. Interbank markets mitigate it with payment-versus-payment (PvP) settlement through systems like CLS, which release each currency leg only if the other settles; businesses mostly experience FX risk as opaque pricing, prefunded balances waiting in foreign accounts, and reconciliation across providers.
Infinite builds FX into the same account as every other payment: quotes, execution, and settlement across currencies like GBP, EUR, MXN, and BRL run through the same API and reconcile on the same ledger — and Transfer Routes can weigh an FX conversion against other paths for each payment.
Frequently asked questions
How long does FX settlement take?
Spot FX conventionally settles two business days after the trade ("T+2"). The lag exists to arrange delivery of both currencies across time zones — and it is where settlement risk lives. T+0 settlement
What is Herstatt risk?
FX settlement risk, named for a 1974 bank failure: one party delivers the currency it sold and the counterparty collapses before delivering the other side. Interbank markets mitigate it with payment-versus-payment settlement. Foreign Exchange
What is CLS?
CLS is the interbank settlement system that removes FX settlement risk for its member banks by settling both currency legs payment-versus-payment: neither side’s payment is final unless the other’s is. It settles trillions of dollars in instructions daily across 18 major currencies.
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