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; Gel code=G13
Lien, Donald and TSE, Yiu Kuen.
A Survey on Physical Delivery Versus Cash Settlement in Futures Contracts. (2006). Research Collection School Of Economics.
Available at: http://ink.library.smu.edu.sg/soe_research/774
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