Jun 24, 2020
Commodity futures trading
Futures contracts are a special type of agreement under the strict rules of commodity exchanges, which may or may not require the actual delivery of goods at a future date and payment in cash.
It can be defined as a contract for the delivery of some commodities without mentioning much specific, some business rules under the body, in a set of forms, condition that units of quantity, quality and delivery time are rigid, only the total quantity and price determined by both parties are open.
Although the exact date of settlement is determined by the seller's wishes and the established rules of the Commodity Exchange, such contracts apply only to future settlement.
This type of contract does not specify a specific grade for a commodity, but implies a basic grade, called a contract grade, which is the common grade for all futures transactions.
Details such as amount, settlement time and quality are mentioned in the rules and regulations and are common in all these contracts.
The parties must set the settlement price for the contract within one trading day specified by the exchange.
Futures contracts can only be signed within the "circle" of a Commodity Exchange, not outside it.
Only members of commodity exchanges are allowed to conduct such transactions.
No outsider can be a party to a futures agreement.
Such contracts can only be entered into in multiples of fixed trading units.
Such contracts cannot be signed for a small number of these units.