Approved Delivery Facility

AAA

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."

INVESTOPEDIA EXPLAINS '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. Actuals

    The physical commodity that underlies a futures contract or is ...
  2. Cash Commodity

    In futures trading, the cash commodity is delivered for payments. ...
  3. Certificated Stock

    The stock of a commodity that has been inspected by qualified ...
  4. Commercial Grain Stock

    The current amount of harvested grain crops stored domestically, ...
  5. Basis Grade

    The minimum accepted standard that a deliverable commodity must ...
  6. Crop Year

    The time period from one year's harvest to the next for an agricultural ...
Related Articles
  1. The Role Of Speculators In The Commodity ...
    Investing Basics

    The Role Of Speculators In The Commodity ...

  2. Commodities: The Portfolio Hedge
    Active Trading

    Commodities: The Portfolio Hedge

  3. Trading The Soft Commodity Markets
    Options & Futures

    Trading The Soft Commodity Markets

  4. Diamonds: The Missing Commodity Derivative ...
    Active Trading

    Diamonds: The Missing Commodity Derivative ...

comments powered by Disqus
Hot Definitions
  1. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  2. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  3. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  4. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  5. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
  6. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
Trading Center