What are the salient features of a commodity futures contract?
A commodity futures contract is a tradable standardized contract, the terms of which are set in advance by the commodity exchange organizing abinitio trading in it. The futures contract is for a specified variety of a commodity, known as the basis, though quite a few other similar varieties, both inferior and superior, are allowed to be deliverable or tenderable for delivery against the specified futures contract. The quality parameters of the basis and the permissible tenderable varieties; the delivery months and schedules; the places of delivery; the ‘on’ and ‘off’ allowances for the quality differences and the transport costs; the tradable lots; the modes of price quotes; the procedures for regular periodical (mostly daily) clearings; the payment of prescribed clearing and margin monies; the transaction, clearing and other fees; the arbitration, survey and other dispute redressing methods; the manner of settlement of outstanding transactions after the last trading day, the penalties
