If the buyer and the seller reach the intention of forward delivery and hope that the forward price will be stable (value preservation or cost stability), the buyer and the seller can preliminarily agree on the forward delivery of the goods and preserve the value through the futures market.
Step 2: Buyers and sellers open positions in the futures market.
Buyers and sellers choose to open positions in the futures market in the contract month closest to the forward delivery goods, and the opening amount is equivalent to the forward delivery goods. The timing and price of holding positions shall be determined by both parties according to market conditions. This is equivalent to signing a forward contract through the futures market.
Step 3: Make regular cash transfers.
1) negotiate the spot settlement price and closing price.
On the date when the buyer and the seller hope to deliver, the buyer and the seller first agree on the closing price (within the limit of futures price increase and decrease on the approval date) and the spot delivery price.
The difference between the agreed closing price and the spot settlement price shall be reasonable. The determination of the difference should consider the savings of transportation cost, storage fee and interest.
2) Sign a cash-for-cash agreement and a spot transaction agreement and report them to the Exchange for approval.
After the negotiation is successful, the buyer and the seller sign the futures cash transfer agreement (approval) form, spot transaction agreement or warehouse receipt transfer agreement, and bring the above agreements to the delivery department of the exchange to apply for cash transfer, and the exchange will conduct approval according to the above materials.
3) After receiving the Form of Futures-to-Spot Agreement (Approval) and the Agreement of Spot Trading or Warehouse Receipt Transfer, the Exchange will check, and if it meets the requirements, it will be approved the next day, and will immediately close its position on the day of approval 15. If it does not meet the requirements, notify the members of both parties, and the members shall notify the customers in time. 4) go through the formalities. If the warehouse receipt period is used for cashing out, on the day after the approval date, the buyer and the seller will transfer the warehouse receipt and payment to the exchange and pay the required handling fee. Where goods other than warehouse receipts are used for cash exchange, the buyer and the seller shall make spot delivery in accordance with the spot sale agreement.
5) pay taxes. If the warehouse receipt period is used for cashing, the buyer and the seller shall go through the tax formalities with the tax authorities. The first step is to find the cashback object. The party wishing to cash in the future can find the future cash by itself or publish the future cash information through the exchange to find the future cash.
The second step is to carry out interim cash transfer (the method is the same as the third step above).
Back-to-catalog futures turn to spot-for example, 1: future positions is closed at the price agreed by both parties, and spot settlement is conducted at another price agreed by both parties. Both parties are non-spot trading partners.