Approved Delivery Facility

DEFINITION of 'Approved Delivery Facility'

A facility authorized by an exchange to be used as a location for the delivery of commodities tendered upon futures contracts. Approved delivery facilities are typically banks, storehouses, mills, warehouses, grain elevators, stockyards or other depositories where commodities are transferred between two parties in a futures contract that results in physical delivery. A futures contract position can be closed before delivery, at which point there is no exchange of a physical commodity. When a futures contract results in physical delivery, the commodity must be delivered by the seller to the buyer.

Also called "delivery points."

BREAKING DOWN 'Approved Delivery Facility'

Delivery generally refers to the changing of ownership or control of a commodity. A notice of intention to deliver usually precedes it. The new owner can take possession of the physical commodity, can deliver it to the futures market in satisfaction of a short position, or can sell the delivery to another market participant.

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