Public Standardised Transactions

A standardized futures contract has a specific:

1. Underlying Instrument: The commodity, currency, financial instrument, or index upon which the contract is based;

2. Size: The amount of the underlying item covered by the contract;

3. Delivery Cycle: The specified months for which contracts can be traded;

4. Expiration Date: The date by which a particular futures trading month ceases to exist and therefore all obligations under it terminate;

5. Grade or Quality Specification and Delivery Location: A detailed description of the ’’par” commodity, security, or other items that is being traded and, as permitted by the contract, a specification of items of higher or lower quality or of alternate delivery locations available at a premium or discount; and

6. Settlement Mechanism: The terms of the physical delivery of the underlying item pf a terminal cash payment.

The only nonstandard item of a futures contract is the price of an underlying unity, which is determined in the trading arena.


Leave a Comment

fifteen − 10 =

error: Alert: Content is protected !!