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Commodity_Futures_Tradings

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					Commodity Futures Tradings

Word Count:
314

Summary:
Compared to cash contracts, which require payment against the physical
delivery of goods immediately or after a specified period, a futures
contract is a special type of agreement made strictly under the rules of
a commodity exchange, which may or may not call for the actual delivery
of goods and payment in cash on a future date.


Keywords:
Futures Trading, Online Futures Tradings, Futures Trading Software,
Commodity Futures Tradings


Article Body:
Compared to cash contracts, which require payment against the physical
delivery of goods immediately or after a specified period, a futures
contract is a special type of agreement made strictly under the rules of
a commodity exchange, which may or may not call for the actual delivery
of goods and payment in cash on a future date.

According to Emery, a futures contract can be defined as a contract for
the future delivery of some commodity without reference to specific lots,
made under the rules of some commercial body, in a set form, by which the
conditions as to unit of amount, the quality and time of delivery are
stereotyped, and only the determination of the total amounts and the
price is left open to the contracting parties.

Such contracts are meant exclusively for future settlement, though the
exact date of the settlement is decided by reference to the wishes of the
seller and the established rules of the commodity exchange. Such
contracts do not specify the particular grade of a commodity, but
impliedly refer to a basic grade called the contract grade, accepted as
the common grade for all futures dealings. The details in respect to the
amount, the time of settlement, the quality and so forth are mentioned in
the rules and regulations, and are common to all such contracts. The
contracting parties have to decide upon the price at which the contract
is to be settled, sometime in one of the trading months specified by the
exchange.

Futures contracts are made only in the ‘ring’ of the commodity exchanges,
and not outside the exchanges. Only members of a commodity exchange can
enter into such a deal. No outsider can become a party to a futures
agreement. Such contracts can be made only in multiples of a fixed unit
of trading. No such contracts can be made in fractions of these units.