abhishreshthaa
Abhijeet S
Settlements – An Introduction
A contract has a life cycle of one month or longer.
Two weeks before the expiry of a contract, the contract enters into a tender period.
At the start of the tender period, both the parties must state their intentions to give or receive delivery, based on which the parties are supposed to act or bear the penal charges for any failure in doing so.
Those who do not express their intention to give or receive delivery at the beginning of tender period are required to square-up their open positions before the expiry of the contract.
In case they do not their positions are closed out at 'due date rate'.
The links to the physical market through the delivery process ensures maintenance of uniformity between spot and futures prices.
When is the Settlement done?
A Daily Mark to Market (MTM) Settlement is done for each Member
At the end of every trading day, for all the trades
This is done till the date of the Contract expiry
A daily settlement is done to take care of DAILY PRICE FLUCTUATION for all trades
A Final Settlement will be done for each Member
On expiry of the Contract
This will handle the FINAL obligation of the Member for all trades in that contract.
A contract has a life cycle of one month or longer.
Two weeks before the expiry of a contract, the contract enters into a tender period.
At the start of the tender period, both the parties must state their intentions to give or receive delivery, based on which the parties are supposed to act or bear the penal charges for any failure in doing so.
Those who do not express their intention to give or receive delivery at the beginning of tender period are required to square-up their open positions before the expiry of the contract.
In case they do not their positions are closed out at 'due date rate'.
The links to the physical market through the delivery process ensures maintenance of uniformity between spot and futures prices.
When is the Settlement done?
A Daily Mark to Market (MTM) Settlement is done for each Member
At the end of every trading day, for all the trades
This is done till the date of the Contract expiry
A daily settlement is done to take care of DAILY PRICE FLUCTUATION for all trades
A Final Settlement will be done for each Member
On expiry of the Contract
This will handle the FINAL obligation of the Member for all trades in that contract.