Home > Fundamentals > What does foreign ex...

What does foreign exchange delivery mean and how to deliver foreign exchange futures?

2022-01-17

1434

　　In foreign exchange market trading, the psychological endurance of investors is very important. Investors must be aware of the risks of foreign exchange delivery, and cannot invest in the market blindly and arbitrarily. So what exactly does foreign exchange delivery mean and how to deliver foreign exchange futures? This article briefly introduces these two issues to you.

　　What does foreign exchange settlement mean?

　　The concept of delivery comes from futures, which are divided into: physical delivery and cash delivery.

　　first delivery day

　　1. The buyer declares the intention. The buyer submits a letter of intent for the desired commodity to the exchange within the first delivery day. The content includes the variety, grade, quantity and the name of the designated delivery warehouse.

　　2. The seller delivers the standard warehouse receipt. The seller shall deliver the valid standard warehouse receipt with the storage fee paid to the Exchange within the first delivery day.

　　Second delivery day

　　The exchange allocates standard warehouse receipts. On the second delivery day, the Exchange will allocate standard warehouse receipts to buyers based on the existing resources and in accordance with the principles of "time priority, quantity rounded, nearest matching, and overall arrangement". Standard warehouse receipts that cannot be used for delivery of the next futures contract shall be distributed to the buyer by the Exchange in proportion to the total delivery volume of the current month.

　　The third delivery day

　　1. The buyer pays and takes the order. The buyer must deliver the payment to the exchange and obtain a standard warehouse receipt before 14:00 on the third delivery day.

　　2. The seller collects the payment. The exchange shall pay the seller before 16:00 on the third delivery day.

　　Fourth and fifth delivery days

　　The seller pays the special VAT invoice

　　last delivery date

　　If the last trading day falls on a statutory holiday or if the delivery period falls on a statutory holiday, the delivery period will be extended accordingly, ensuring five delivery days. The five delivery days are referred to as the first, second, third, fourth and fifth delivery days respectively, and the fifth delivery day is the final delivery day.

　　How to deliver foreign exchange futures?

　　Typically, one of the two currencies is the U.S. dollar, in which case the futures price for each currency is x dollars. The futures price of some currencies can be expressed in different ways with the corresponding spot exchange rate.

　　After the buyer and seller of a futures contract reach a transaction on the exchange, the settlement center becomes its counterparty until the actual delivery of the futures contract. Foreign exchange futures and contract foreign exchange transactions are not only related to each other, but also differ in specific operation methods.

　　Foreign exchange futures have a delivery date. The delivery months for all foreign exchange futures contracts in the international currency market are the same: March, June, September and December each year. The third Wednesday of the delivery month is the delivery day of the month.

　　Regarding the issue of foreign exchange delivery, this article introduces what foreign exchange delivery means and how to deliver foreign exchange futures. In short, the foreign exchange market is very volatile and the risks are also high. Therefore, when making financial investments in the market, it is necessary to carefully consider traditional influencing factors and accidental factors, and conduct a good analysis of the market in order to generate huge profits in a short period of time.

The above information is provided by special analysts and is for reference only. CM Trade does not guarantee the accuracy, timeliness and completeness of the information content, so you should not place too much reliance on the information provided. CM Trade is not a company that provides financial advice, and only provides services of the nature of execution of orders. Readers are advised to seek relevant investment advice on their own. Please see our full disclaimer.

CM Trade

As a world leading financial trading platform, CMtrade Provides comprehensive one-stop trading services and opportunities for traders.

[Products]

The platform provides over 32 kinds of popular financial products such as forex, precious metals, crude oil, indices, cryptocurrencies and more.

[System]

2 top trading systems CM Trade MT4 / CM Trade APP, powerful and easy to operate

[Service]

Comprehensive market news, professional market analysis, 7*24 hours online customer service

[Advantage]

Low cost, high leverage, flexible one-stop all day two-way trading.

[Authority]

Licensed and strictly regulated by authorities. Traders deposits are independently kept by the bank. Fast deposit and withdrawal. Fair, efficient and transparent trading environment.

Free Access
Daily Trading Strategy Download Now

CM Trade Mobile Application

Economics Calendar

What does foreign exchange delivery mean and how to deliver foreign exchange futures?

Access to global trading markets anytime and anywhere