The seller shall deliver the goods to the delivery warehouse designated by the exchange within the time limit specified by the exchange, and the warehouse will issue a warehouse receipt after acceptance, which will become a standard warehouse receipt after registration by the exchange. After entering the delivery period, the seller submits the standard warehouse receipt and the corresponding special VAT invoice, and the buyer submits the full loan and goes through the delivery formalities at the exchange.

Only an enterprise as a legal person has the right of physical delivery. Natural person customers are not allowed to make physical delivery. If physical delivery is required, legal person customers who can make physical delivery can be entrusted to make delivery on their behalf. Physical delivery is essentially a spot transaction, but physical delivery in futures trading is a continuation of futures trading. Although the proportion of final physical delivery of futures contracts is very small, it is this very small amount of physical delivery that connects the futures market with the spot market, which is the basis for the existence of the futures market and provides an important prerequisite for the function of the futures market.

What does physical delivery of futures mean?

Physical delivery refers to the process that after the futures contract expires, according to the rules and procedures of the exchange, both parties to the transaction end the open contract by transferring the ownership of the goods contained in the futures contract. At present, domestic commodity futures are delivered in kind, stock index futures are delivered in cash and treasury bonds are delivered in kind.

Can individual investors participate in physical delivery?

First of all, ordinary legal person investors can participate in physical delivery, and some entities hedge in the futures market to avoid risks due to business needs, so as to make physical delivery.

However, for individual investors, they cannot participate in physical delivery, and even some exchanges do not allow individual investors to hold positions in the delivery month.

In futures trading, individual investors and institutional investors treat the delivery date completely differently. Taking domestic futures exchanges as an example, individual investors generally cannot participate in physical delivery of futures. Taking crude oil futures as an example, individual investors must close their positions on the delivery date and cannot go to the crude oil warehouse to pick up the goods, which is stipulated in the futures trading regulations.

When we trade on the exchange, we must follow its trading rules. If we think the trading rules are unreasonable, we will not participate.