Like options, futures contracts have a fixed term. The end date of a future is called the expiration or expiration date. In futures trading, a distinction can be made between clearing contracts (cash settlement) and delivery contracts. In the case of clearing contracts, no delivery of the underlying value takes place on the expiry date, but the exchange rate differences are settled. In the case of delivery contracts, physical delivery of the underlying asset normally takes place on the expiry date.
At Saxo Bank, physical delivery is not supported. We therefore recommend that you are aware of the expiry and first notice day (FND) of all futures contracts in which you have positions and ensure that they are closed before the correct day.
If there is a Notice Day listed on your trade ticket, then your contract is settled physically. Taking or making physical delivery in an underlying asset is not offered through Saxo. We advise you to take note of the expiry and first notice dates (FND) for all the futures contracts you hold and ensure they are closed before the appropriate day.
For some contracts, the FND which Saxo utilises could be several days earlier than the FND provided by the relevant exchange. Please always refer to the trading conditions displayed on the contract in the trading platform as well as the trade ticket to see specifications for each contract before trading.
- If the expiry day is prior to the first notice day (FND) as utilised by Saxo, the contract will be closed by Saxo on the expiry day.
- If the FND as utilised by Saxo is the same or prior to the expiry day any client's open contract will be closed by Saxo on the trading day prior to such FND.
- If futures positions are not closed before the relevant date, Saxo will close the position(s) on your behalf at the first available opportunity at the prevailing market rate. Clients who have not closed their positions in a timely fashion, as described above, will incur additional charges.
The specifications of each futures contract can be found here.
Additional information about expiries can also be found in our futures trading conditions.
What is cash and physical settlement?
Cash settlement is when a contract is settled in cash. A physical settlement is when the underlying contract has physical delivery. Physical delivery is most relevant for agricultural and energy products, but some financial products are also physically delivered. Saxo Bank does not support physical delivery of any product. If your end-customer's contract is physically settled, FND will be shown on the order ticket.
What is the difference between due date and first notice date (FND)?
The FND indicates the day on which the contract enters the "notification period", after which long positions can be assigned. The expiration date is the day on which the contract expires and is no longer negotiable. Sometimes the two are on the same day.
Why doesn't the futures position disappear on expiration?
This only happens for cash-settled contracts that are held until maturity. On cash-settled futures contracts, positions taken on the expiration date are locked. The position is removed from the portfolio when the final settlement price is available and the manual settlement process has been completed. This can take up to two business days after the expiration date. You can avoid this by rolling or closing your end-customer's position before the contract expires.