A Survey on Physical Delivery Versus Cash Settlement in Futures Contracts
A futures contract may adopt physical delivery or cash settlement to liquidate open positions after the maturity day. While traditionally physical delivery specification is favored, exchanges have recently turned to examine cash settlement possibilities. This paper summarizes current literature on settlement specifications with emphases on market manipulation, cash index construction, and hedging effectiveness comparisons.
Futures contract; Physical delivery; Cash settlement; Market manipulation; Cash index construction;
International Review of Economics and Finance
Lien, Donald and TSE, Yiu Kuen.
A Survey on Physical Delivery Versus Cash Settlement in Futures Contracts. (2006). International Review of Economics and Finance. 15, (1), 15-29. Research Collection School Of Economics.
Available at: http://ink.library.smu.edu.sg/soe_research/454