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Is the settlement mechanism different for Cash and Physical Delivery?

April 26, 2017cash DELIVERY different mechanism physical

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Is the settlement mechanism different for Cash and Physical Delivery?

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In case it is impossible, or impractical, to effect physical delivery, open positions (open long positions always being equal to open short positions) are closed out on the last day of trading at a price determined by the spot “cash” market price of the underlying asset. This price is called “Exchange Delivery Settlement Price” or EDSP. In case of physical settlement short side delivers to the specified location while long side takes delivery from the specified location of the specified quantity / quality of underlying asset.