Futures trading execution process
A futures trading first notice day (FND) comes the day after an investor who has purchased a futures contract may be obliged to take physical delivery of the contract’s underlying commodity. The FND will vary depending on the contract and exchange rules. Execution, Clearing, and Settlement . Any transfer of financial instruments, such as stocks, in the primary or secondary markets involves 3 processes: execution; clearing; settlement; Execution is the transaction whereby the seller agrees to sell and the buyer agrees to buy a security in a legally enforceable transaction. Thereafter, all the processes that lead up to settlement is referred to as clearing, such as recording the transaction. The process is often enhanced through the use of electronic bulletin boards where dealers post their quotes. The process of negotiating by phone or electronic message, whether customer to dealer or dealer to dealer, is known as bilateral trading because only the two market participants directly observe the quotes or execution.