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FRM-1 Study Notes


  • Very few futures contract lead to a delivery of the underlying asset. Most are closed out early
  • The period of delivery is decided by the exchange, but the exact date of delivery is specified by the short contract holder
  • Notification to deliver is given by the broker to the clearing house. The number of contracts and the specifics of the delivery ( what grade, type, quality, location, etc) is mentioned
  • Exchange identifies a party with a long position to accept delivery. Typically one with the oldest outstanding long position
  •  Party with the long position has to accept the delivery
  • Whole delivery process from the issuance of intention to deliver to delivery takes 2–3 days
  • Cash settlement is also possible. Settlement price is the spot price of the underlying on the day opening/day close

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