Spot is the physical delivery in reality. I. The concept and function of physical delivery refers to the process that when a futures contract expires, both parties to the transaction settle the expired open contract by transferring the ownership of the goods contained in the futures contract. Commodity futures trading generally adopts the physical delivery system. 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 and provides an important prerequisite for the function of the futures market. In the futures market, physical delivery is an institutional guarantee to make futures prices and spot prices tend to be consistent. When the futures price seriously deviates from the spot price due to excessive speculation, traders will arbitrage between the futures and spot markets. When the futures price is too high and the spot price is too low, traders sell futures contracts in the futures market and buy goods in the spot market. In this way, the spot demand increases, the spot price rises, the supply of futures contracts increases, the futures price drops, and the spot price difference narrows; When the futures price is too low and the spot price is too high, traders buy futures contracts in the futures market and sell goods in the spot market. In this way, futures demand increases, futures prices rise, spot supply increases, and spot prices fall, making spot spreads tend to be normal. The above analysis shows that through physical delivery, futures and spot markets can achieve mutual linkage, and futures prices eventually tend to be consistent with spot prices, so that futures markets can really play the role of price barometer. Some hedgers who are familiar with the spot circulation channels, in actual operation, directly throw or buy the spot in the futures market according to the relevant information of the spot market to obtain the price difference. This on-call approach eliminates the risks brought by various non-price factors to a certain extent, and objectively plays a role in guiding production and ensuring profits. Two. Delivery method and settlement price (I) Delivery method 1, "centralized" delivery: that is, all expired contracts are delivered in one lump sum after the last trading day of the delivery month. 2. "Decentralized" delivery: that is, in addition to all due contracts delivered in pairs after the last trading day of the delivery month, delivery can also be made at a specified time between the first trading day and the last trading day of the delivery month. (II) Settlement price of delivery The settlement price of futures contracts in China is usually the settlement price on the date of contract delivery or the settlement price on the last trading day of futures contracts. The pricing of delivery goods is based on the delivery settlement price, plus the premium of different grades of goods quality and the premium of different delivery warehouses and benchmark delivery warehouses. Three. Procedures for physical delivery (I) The first delivery date is 1. The buyer declared his intention. Within the first delivery date, the buyer submits a letter of intent for the required goods to the exchange. The contents include variety, brand, quantity and the name of the designated delivery warehouse. 2. The seller shall submit the standard warehouse receipt. The seller shall submit to the exchange a valid standard warehouse receipt that has paid the storage fee within the first delivery day. (2) On the second delivery date, the exchange distributes standard warehouse receipts. On the second delivery day, the exchange will issue the standard warehouse receipt to the buyer according to the existing resources and the principle of "time first, quantity rounding, nearest matching and overall arrangement". For the standard warehouse receipt that cannot be used for the delivery of the next futures contract, the exchange will distribute it to the buyer according to the proportion of the total delivery in the current month. (3) The third delivery date is 1. The buyer pays and accepts the bill. The buyer must deliver the payment to the exchange and obtain the standard warehouse receipt before the third delivery date 14:00. 2. The seller collects money. The exchange shall pay the payment to the seller before the third delivery date 16:00. (4) The seller shall pay the special VAT invoice on the fourth and fifth delivery days. If the standard warehouse receipt is delivered in kind at the exchange, its circulation procedure is as follows: (1) The seller's investor endorses it and submits it to the seller's brokerage member; (2) After endorsement by the seller member, it shall be submitted to the Exchange; (three) after the seal of the exchange, submit it to the buyer's member; (4) Endorsed by the broker members of the buyer and delivered to the investors of the buyer; (5) The non-broker members of the buyer and the investors of the buyer shall go through the relevant formalities in the warehouse after endorsement; (6) After the warehouse or its agent seals, the buyer's non-broker members and the buyer's investors can pick up the goods or transfer the ownership. Four. Handling of delivery breach (I) Determination of delivery breach The buyer and seller of a futures contract commit one of the following acts, which constitutes a delivery breach: 1. The seller fails to deliver a valid standard warehouse receipt within the stipulated delivery period; 2. If the buyer fails to pay the payment within the specified delivery period or the payment is insufficient, a) the goods delivered by the seller do not meet the specified standards. (II) Handling of Default in Delivery If a member defaults in the physical delivery of a futures contract, the exchange will perform the contract first. The Exchange may handle the breach of contract through subscription, auction, etc., and the defaulting member shall bear the losses and expenses caused thereby. The Exchange may also impose penalties on defaulting members, such as paying liquidated damages and compensation.