(1) Termination of delivery: the exchange will refund the buyer's payment;
(2) Continued delivery: The Exchange will issue a standard warehouse receipt purchase announcement on the next trading day when the seller is judged to be in default, and organize the purchase within seven trading days.
If the purchase is successful, the exchange will pay the standard warehouse receipt to the buyer; If the purchase fails, the seller shall pay the buyer compensation of 15% of the amount of the contract in breach, and the exchange will return the payment to the buyer and terminate the delivery. The seller shall bear all economic losses and expenses arising from the purchase.
2. If the buyer breaches the contract, the seller can make one of the following choices.
(1) Termination of delivery: the exchange returns the seller's standard warehouse receipt;
(2) Continued delivery: The Exchange will issue an auction announcement of standard warehouse receipts on the next trading day when the buyer is judged to be in default, and organize the auction within seven trading days.
If the auction is successful, the exchange will pay the delivery fee to the seller; If the auction fails, the buyer will pay compensation of 15% of the contract amount to the seller, and the exchange will terminate the delivery after returning the seller's standard warehouse receipt, and the buyer will bear all economic losses and expenses arising from the auction.
If the buyer and seller breach the contract, the other party chooses to terminate the delivery. After the delivery is terminated, the exchange's delivery guarantee liability shall be settled.
If the buyer and the seller breach the contract, the exchange will terminate the delivery and impose a fine of 5% of the contract amount in breach.
When a member defaults on partial delivery, the standard warehouse receipt or payment received by the defaulting member can be used for default treatment. If a member intentionally breaches the contract in the physical delivery, it shall be handled in accordance with the relevant provisions of the Measures for Handling Violations of Shanghai Futures Exchange. The breaching party and the designated delivery warehouse are obliged to provide evidence related to the breach of contract. If a member refuses to provide evidence, it will not affect the determination of the facts of breach of contract.
Extended data:
Futures, whose English name is futures, is completely different from spot. Spot is actually a tradable commodity. Futures are mainly not commodities, but standardized tradable contracts based on some popular products such as cotton, soybeans and oil and financial assets such as stocks and bonds. Therefore, the subject matter can be commodities (such as gold, crude oil and agricultural products) or financial instruments.
The delivery date of futures can be one week later, one month later, three months later or even one year later.
A contract or agreement to buy or sell futures is called a futures contract. The place where futures are bought and sold is called the futures market. Investors can invest or speculate in futures.
Because futures trading is an open contract transaction of forward delivery goods, a lot of market supply and demand information is concentrated in this market, and different people come from different places and have different understandings of all kinds of information, which leads to different views on forward prices through open bidding. In fact, the process of futures trading is a comprehensive reflection of the change of supply and demand relationship and the expectation of price trend in a certain period of time in the future. This kind of price information has the characteristics of continuity, openness and anticipation, which is conducive to increasing market transparency and improving resource allocation efficiency.
avoid risks
The emergence of futures trading provides a place and means for the spot market to avoid price risks. Its main principle is to use futures and spot markets for hedging transactions. In the actual production and operation process, in order to avoid rising costs or falling profits caused by changing commodity prices, futures trading can be used for hedging, that is, buying or selling futures contracts with the same quantity but opposite trading directions in the futures market, so that the gains and losses of futures and spot market transactions can offset each other. Lock in the production cost or commodity sales price of the enterprise, maintain the established profit and avoid the price risk.
hedging
When buying or selling a certain number of spot commodities in the spot market, selling or buying futures commodities (futures contracts) of the same variety and quantity in the opposite direction in the futures market will make up for the losses in another market with the profits in one market to avoid price risks.
Futures trading can preserve the value because the spot price of a specific commodity is influenced and restricted by the same economic factors, and the price changes of the two are generally in the same direction. Due to the existence of the delivery mechanism, the spot price of futures contracts converges near the delivery period.
Delivery: there are generally two ways to close futures trading (that is, close futures), one is to hedge and close futures; The second is physical delivery. Physical delivery is to fulfill the responsibility of futures trading through physical delivery.
Therefore, futures delivery refers to the behavior of buyers and sellers of futures trading to make physical delivery of their respective expired open contracts in accordance with the provisions of the exchange when the contracts expire and end their futures trading.
Physical delivery accounts for a small proportion of the total futures contracts. However, it is the existence of the physical delivery mechanism that makes the futures price change synchronous with the related spot price change, and gradually approaches with the approaching of the contract expiration date.
As far as its nature is concerned, physical delivery is a kind of spot trading behavior, but physical delivery in futures trading is the continuation of futures trading, which is at the junction of futures market and spot market and is the bridge and link between futures market and spot market. Therefore, the physical delivery in futures trading is the basis of the existence of the futures market and the fundamental premise for the two major economic functions of the futures market to play.
The two functions of futures trading provide a stage and foundation for the application of the two trading modes in the futures market. The function of price discovery requires the participation of many speculators, which concentrates a lot of market information and abundant liquidity. The existence of hedging transactions provides tools and means for avoiding risks.
At the same time, futures is also an investment tool.
Due to the fluctuation of futures contract prices, traders can make use of arbitrage to earn risk profits through contract spreads.