 |
Commodity Futures Tradings |
|
|
Submitted by Janeane Carnagie
| RSS Feed
| Add Comment
| Bookmark Me!
Compared to cash contracts, which require payment against the physical delivery of goods immediately or after a specified period, a futures contract is a special type of agreement made strictly under the rules of a commodity exchange, which may or may not call for the actual delivery of goods and payment in cash on a future date.
According to Emery, a futures contract can be defined as a contract for the future delivery of some commodity without reference to specific lots, made under the rules of some commercial body, in a set form, by which the conditions as to unit of amount, the quality and time of delivery are stereotyped, and only the determination of the total amounts and the price is left open to the contracting parties.
Such contracts are meant exclusively for future settlement, though the exact date of the settlement is decided by reference to the wishes of the seller and the established rules of the commodity exchange. Such contracts do not specify the particular grade of a commodity, but impliedly refer to a basic grade called the contract grade, accepted as the common grade for all futures dealings. The details in respect to the amount, the time of settlement, the quality and so forth are mentioned in the rules and regulations, and are common to all such contracts. The contracting parties have to decide upon the price at which the contract is to be settled, sometime in one of the trading months specified by the exchange.
Futures contracts are made only in the ‘ring’ of the commodity exchanges, and not outside the exchanges. Only members of a commodity exchange can enter into such a deal. No outsider can become a party to a futures agreement. Such contracts can be made only in multiples of a fixed unit of trading. No such contracts can be made in fractions of these units.
|
|
|
|
|
LinkedIn Recommendation:
 Catalina Mondello - Computer Systems Analyst at Widget Marketing - I just attended one of Teo's free eWorkshops last week and decided to hire him for my project on the spot. He had my site up and running in less than a week and pointed me to the videos on eWorkshopCourses.com to help me through the social media stuff myself. I am looking forward to doing more work with him. He's a powerhouse! - March 17, 2012, Catalina was Teo's client |
|
Featured [Investing] Articles:
|
|
