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Basic Question 1 of 5
In futures trading, the exchange clearinghouse has responsibility for which of the following activities?
II. Guaranteeing transactions
III. Setting daily gains and losses
I. Overseeing the delivery process
II. Guaranteeing transactions
III. Setting daily gains and losses
User Contributed Comments 7
| User | Comment |
|---|---|
| georgek | the 'overseeing delivery process' is poorly worded. i don't believe the exchange has a guy on the dock watching the pumping of oil from the tanker to the port. |
| jpducros | Maybe not georgek, but it would be interesting to know if in case of litigation, the clearinghouse would mandate an official to check the respect of the terms of the future. |
| tichas | I doubt the delivery process aspect , i think its beyond the capability of the clearing house |
| ankurwa10 | i don't think actual delivery happens for most of these contracts. Aren't they cash settled mostly? because, the parties essentially want to mitigate risks (price risk for example). I am curious to know as to how does this work for commodities? |
| GBolt93 | think it means more than they are liable to see that the delivery is completed. Though ankurwa is right that the vast majority of contracts don't actually end with delivery. |
| Inaganti6 | Option 1 !? Just imagine those trucks with the Chicago Mercantile Exchange logo unloading hundreds of pigs onto your front yard.... |
| jzty | Option 1 means that the clearinghouse has to make sure that if a delivery is required, then it has to be done. |
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Andrea Schildbach
Learning Outcome Statements
describe the basic features of derivative markets, and contrast over-the-counter and exchange-traded derivative markets
CFA® 2024 Level I Curriculum, Volume 5, Module 1.