What Is a Physical Delivery?

Physical delivery refers to the behavior of the buyer and the seller of a futures contract when the contract expires according to the rules and procedures established by the exchange, through the transfer of ownership of the underlying object of the futures contract, to close the expiring open contract. Commodity futures trading generally uses physical delivery. After entering the delivery period, the seller submits a standard warehouse receipt, and the buyer submits the full payment and goes to the exchange to complete the delivery procedures.

Physical delivery means

Physical delivery

usually,

Physical delivery can be divided into two types: delivery by the seller and delivery by both parties.

1. The so-called two-party settlement refers to

Physical delivery is an institutional guarantee that promotes the convergence of commodity futures prices and spot prices.

Through delivery,

Physical delivery methods include "concentrated" delivery and "decentralized" delivery.

1. "Concentrated" delivery: that is, all expiring contracts

Seller in

(1) Determination of delivery breach

Paper crude oil is also a kind of personal certificate crude oil. Paper crude oil will be denominated in US dollars, and the investment target will be one-month and two-month contracts in the WTI crude oil futures and Brent crude oil futures markets. Unlike the "paper gold" and "paper silver" rules that can be delivered in kind, paper crude oil products will not be delivered in kind but in cash. ^[1]

Many ICBC customers have found an upcoming investment product-"crude oil" in online banking. The market speculates that "paper crude oil" or similar to the "paper gold" product that ICBC has launched is also a personal voucher product. Investors can use this account to enter the crude oil market and buy and sell "virtual crude oil" on the books based on bank quotes. Earn the difference. Referring to the trading threshold of 1 gram per lot of paper gold, the market speculates that paper crude oil may also start with 1 barrel of investment, which means that investors can participate in the crude oil market with less than 600 yuan. I am very interested in "paper crude oil" and will actively participate if the threshold is so low.

Physical delivery of virtual products

Log on to ICBC Internet Banking and see that there is an option for "Account Crude Oil" on the menu of the webpage. After you open it, you can see "Buy first and then sell", "Sell first and then buy", and "Manage commission transactions" ", But in the middle of the screen," This business area is temporarily unavailable for this transaction. "

"Account crude oil" is indeed a product that ICBC will launch, but it cannot be operated yet. We just put information on the website. It will take time to officially launch.
If this product is officially operated, it will be the first crude oil trading product launched by a domestic commercial bank for personal investment.

Risk of physical delivery

In addition to "paper gold", "paper silver", "paper crude oil" and other products, banks may launch more "paper" wealth management products in the future. The main reason why commercial banks are keen on "paper" business is that commercial banks are Facing the predicament of shrinking traditional deposit and loan business and shrinking profit margin of the deposit and loan gap, the development of intermediate business has become an urgent need for commercial banks, and commercial banks have already tasted the sweetness in "paper" business.

Market participants said that crude oil trading fluctuated greatly, and the risk of "paper crude oil" will exceed that of "paper gold". Shanghai medium-term futures analysts said: "If the investment target for paper crude oil is indeed the one-month and bi-monthly contracts in the New York WTI crude oil futures and Brent crude oil futures markets, then investors need to realize that there is no limit for daily crude oil prices. If extreme market conditions are encountered, the risk of huge losses is prone to occur. Can these risk investors bear it? In addition, the factors affecting the trend of crude oil are very complicated and the analysis is difficult. For ordinary investors, in the absence of professional knowledge, Easy to lose, investors are advised not to participate blindly. "