Retender
Contents
Deciphering Retender in Futures Trading: An In-Depth Guide
Unveiling Retender
Retender, or re-tender, is a pivotal concept in futures trading, representing the sale or assignment of the ownership of a commodity or asset intended for delivery as part of a futures or forward contract. This mechanism becomes relevant when the long side of a futures contract opts out of taking physical delivery of the underlying asset.
Understanding the Dynamics of Retender
In essence, retender occurs when the buyer of a futures contract decides against retaining ownership of the underlying asset, which can range from complex commodities like corn or oil. By initiating a retender process, the buyer ensures that the delivery obligation is transferred to another party.
Exploring Special Considerations
Navigating retender involves certain considerations outlined in the delivery notice, including provisions that may necessitate resale within a specific timeframe. The individual receiving the delivery notice assumes responsibility for associated costs, making retendering an expense that is often mitigated by alternative strategies like contract rolling or selling before expiration.
Procedures for Commodity Delivery
Commodity delivery procedures play a crucial role in futures trading, facilitating the movement of goods after a contract's expiration. Certifying commodities and issuing warehouse receipts are integral steps in this process, ensuring transparency and accountability in transactions. Additionally, contract holders receive notices leading up to expiration, offering opportunities to exit the contract or roll it over to a new term.