Delivery Notice

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Delivery Notice
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Delivery notice is a written notice submitted to a long futures contract holder informing them of the requirement to accept delivery of the physical commodity on a specified date from the short futures contract holder[1]. This notice, delivered through the clearing organization, is separate and distinct from the warehouse receipt or other instruments that will be used to transfer title[2].

First Notice Day

"First notice day is the day in which the buyer pf a futures contract can be called upon by the exchange to take delivery of the underlying commodity"[3]. On this day, the exchange estimates the number of traders that are expected to make delivery of the commodity and distributes delivery notices to long futures on a first-in basis. Traders that hold long positions into the first notice day run the risk of being delivered upon but might not be depending on the amount of time that the position has been open[4].

For example, a trader that has been long a futures contract for few weeks will receive a delivery notice before a trader that has established a position the day before first notice day[5].

Issue of the Delivery Notice

A short position holder can offset with long trade any day until the last trading day, However, if a short position holder decides to deliver, they must issue the delivery notice during the delivery notice period. The notice period starts a few days before the beginning of the delivery month and ends just a few days before the delivery month. It allows the clearinghouse to process the delivery notice[6].

Once the clearinghouse member gets the notice from the seller of the contract, the clearinghouse has to determine customer with an established long position will be assigned the delivery notice to take delivery of the cash commodity. The method under which notice is assigned to a buyer who is long futures from exchange to exchange. The notice can be assigned to the buyer with the oldest open long position or the largest net long position[7]. The assignment process continues throughout the delivery period. Additionally, on the last notice day, all open long positions are matched with open short positions and delivery is assigned. All open contracts are settled by the end of their term[8].

Delivery Notice

Delivery notice contain specific details regarding the delivery including[9]:

  • The date when delivery will be made;
  • The location where delivery will be made;
  • The quantity or weight to be delivered;
  • The grade (basis, premium or discount) to be delivered.

In some exchanges, it is required that the buyer accept delivery of the commodity and not allow the buyer to offset the delivery requirement by selling the same futures contract. In this case we call it stopped delivery notice[10].


  1. The Securities Institute of America, (2015)
  2. Garner C. (2012)
  3. Garner C. (2012)
  4. Garner C. (2012)
  5. Garner C. (2012)
  6. Shaik K. (2014)
  7. The Securities Institute of America, (2015)
  8. Shaik K. (2014)
  9. The Securities Institute of America, (2015)
  10. The Securities Institute of America, (2015)


Author: Michał Dembowski