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.

RELATED TERMS
  1. Current Delivery

    A type of futures contract that requires the delivery of the ...
  2. Delivery Price

    The financial value of the conveyance of the underlying commodities ...
  3. Physical Delivery

    Term in an options or futures contract which requires the actual ...
  4. Delivery Point

    In futures contracts, the delivery point is the place where the ...
  5. Spot Commodity

    A commodity traded on the spot market. That is, with the expectation ...
  6. Delivery Month

    A key characteristic of a futures contract that designates when ...
Related Articles
  1. ETFs & Mutual Funds

    Explaining Delivery Versus Payment

    Delivery versus payment is a common procedure for settling the exchange of securities.
  2. Markets

    Crude Oil Prices: Comparing Future Price Vs. Current Market Price

    Discover the differences between oil futures market prices and oil spot market prices and what leads to the differences between the two.
  3. Markets

    Understanding the Commodity Market

    There are currently 50 physical and virtual commodity markets worldwide where almost 100 primary commodities trade through the exchange of ownership rights.
  4. Investing

    What does DDP Mean?

    Delivery duty paid (DDP) is a shipping term specifying that the seller is responsible for all costs associated with delivery of the goods to the buyer. It is usually used when goods are exported ...
  5. Personal Finance

    How Amazon's Restaurant Delivery Service Makes Money (AMZN)

    Amazon's delivery service acts as a loss leader to corner the market now before providing high margin revenue in the future.
  6. Personal Finance

    The 3 Best Shipping Services to Use This Holiday Season (UPS, FDX)

    Look at the strengths, weaknesses and comparative costs of the three best shipping companies: the U.S. Postal Service, UPS and FedEx.
  7. Managing Wealth

    How To Invest In Commodities

    Find out which futures, options or funds will be your perfect commodity portfolio fit.
  8. Insights

    Introducing the New Starship Technologies Delivery Robot

    A self-driving delivery robot designed by the co-founders of Skype is revolutionizing the way goods are shipped and delivered by eliminating inefficiency.
  9. Trading

    The Difference Between Forwards and Futures

    Both forward and futures contracts allow investors to buy or sell an asset at a specific time and price.
  10. Markets

    Trading Gold And Silver Futures Contracts

    If you are a hedger or a speculator, gold and silver futures contracts offer a world of profit-making opportunities.
RELATED FAQS
  1. What's the difference between cash-on-delivery differ and delivery against payment?

    Find out more about cash on delivery and delivery versus payment transactions and the difference between these two types ... Read Answer >>
  2. How do I learn technical skills for trading commodities?

    Learn what resources are available to learn about trading commodities, and understand some of the differences between stocks ... Read Answer >>
  3. What does it mean to take delivery of a derivative contract?

    Find out more about derivative contracts and what it means when the holders of derivative contracts take delivery of the ... Read Answer >>
  4. Why do futures' prices converge upon spot prices during the delivery month?

    It's a fairly safe bet that as the delivery month of a futures contract approaches, the future's price will generally inch ... Read Answer >>
  5. How are commodity spot prices different than futures prices?

    Find out more about commodity spot and futures prices, how to calculate a commodity's futures price, and the differences ... Read Answer >>
  6. What are some securities that have spot rates?

    Learn about the types of assets that have spot rates, and understand how the spot rate is used to determine the fair market ... Read Answer >>
Hot Definitions
  1. Put Option

    An option contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying security ...
  2. Frexit

    Frexit – short for "French exit" – is a French spinoff of the term Brexit, which emerged when the United Kingdom voted to ...
  3. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
  4. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  5. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  6. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
Trading Center