InvestorQ : Do futures transactions pertain to a future date for settlement?
Ria Jain made post

Do futures transactions pertain to a future date for settlement?

Answer
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Dilmini Mercia answered.
2 years ago


That is the basic difference between a commodity spot market and a commodity futures market. But the spot name is actually a misnomer. Since spot delivery is not possible practically, the seller is actually given 5-7 days time to complete the execution and honouring of the contract. That is because the entire process of delivering the commodity at the prescribed spot involves formalities and compliance requirements apart from the actual physical movement. Commodity futures pertain to a specific settlement date in the future. Normally, futures expire each month and at any point of time traders have access to trade in 5-6 monthly futures. Volumes are normally focused in the near month only.