Chapter 5 Physical Delivery
This Chapter is only applicable to deliverable Commodity Futures Contracts. This Chapter relates mainly to the Exchange's role as a facilitator in the delivery of Title Documents and the underlying Commodity. The Exchange seeks to mitigate delivery risks by facilitating delivery of Title Documents via the Clearing House and the delivery of the underlying Commodity between the Buyer and the Seller. The Clearing Rules and this Rules focus on the obligations of the Member effecting delivery via the Clearing House, whereas the relevant Contract Specifications focuses on the physical delivery obligations of the Buyer and Seller upon the maturity of the deliverable Commodity Futures Contract.
5.1 Title Documents and Physical Delivery Procedures
5.1.1 Payment Against Title Documents
Each Trading Member shall cooperate with its sponsoring Clearing Member to enable each Clearing Member to effect delivery of Title Documents against payment as contemplated in the Clearing Rules and the relevant Contract Specifications. "Title Documents" refers to bills of lading, title certificates, endorsed warehouse receipts or any other equivalent documents evidencing title to the underlying Commodity and any other documents required to release payment, as contemplated in the relevant Contract Specifications.
5.1.2 Duty Of Members To Mitigate Risk Of Non-Delivery
Prior to the Last Trading Day, each Member shall require evidence from the respective Seller(s) or Buyer(s) having accounts on its books, that all Open Positions which will not be offset on the Last Trading Day shall be completed by delivery of the relevant underlying Commodity. If the Seller(s) or the Buyer(s) fails to provide such evidence, the Member shall, unless entitled to opt otherwise under the relevant Contract Specifications, liquidate the remaining Open Positions on or before the Last Trading Day. Unless otherwise permitted under the relevant Contract Specifications, each Member shall liquidate any and all Open Positions relating to lot sizes less than the minimum size prescribed under the relevant Contract Specifications for physical delivery.
5.1.3 No Financing of Performance Deposits or other Escrow Assets
No General Trading Member shall grant, whether directly or indirectly, any advance, loan or credit facilities to any Buyer or Seller for the purpose of posting Performance Deposits or other Escrow Assets (where applicable) to the Clearing House.
5.1.4 Delivery Obligations are Deemed Rules
Material terms relating to delivery obligations, including those pertaining to delivery dates, quality, quantity, location, acceptance notices or delivery notices as set forth in the relevant Contract Specifications, are deemed incorporated into this Rules by reference herein.
5.1.5 Delivery Default Deemed Rule Violation
To ensure the integrity of the delivery process as contemplated in this Rules and the Clearing Rules, a Member responsible for a Delivery Default is deemed to have committed a Rule Violation and may be subject to Sanctions as contemplated in Chapter 7 of this Rules.
5.1.6 Passing of Property and Risk
Property and risk in relation to an underlying Commodity under any deliverable Futures Contract shall pass in accordance with the provisions in the relevant Contract Specifications and, if not so dealt with, the provisions of the Sale of Goods Act 1979. For the avoidance of doubt, at no time shall property or risk in any underlying Commodity pass to the Exchange.
Amended on 18 January 2022.
5.2 Designated Ports, Factories, Surveyors, Samplers, Analysts and Other Organisations and Marks
The Exchange shall maintain a list of Designated Ports, factories, surveyors, samplers, analysts and other organisations and marks as contemplated in the relevant Contract Specifications. A current and updated list of such Designated Ports, factories, surveyors, samplers, analysts and other organisations and marks shall be available on the Exchange's website. The Exchange may from time to time list or de-list any Designated Ports, factories, surveyors, samplers, analysts or other organisations or marks with regard to existing or new Contract Months or both (unless otherwise provided in the relevant Contract Specifications) as the Exchange may determine in its absolute discretion. "Designated Ports" refers to any of the Exchange-designated ports of loading as indicated in the relevant Contract Specifications.
5.3 Disclaimer of Exchange Liability for Physical Delivery and Warehousing
5.3.1 Title Documents and Transfer of Title
The Exchange accepts no liability and does not guarantee the satisfactory discharge of any physical delivery obligations under any deliverable Futures Contract. The Exchange further disclaims any liability arising from or in connection with:(a) the delivery or non-delivery of Title Documents by any Clearing Member; and(b) any irregularities in the transfer of title in the underlying Commodity from the Seller to the Buyer.
5.3.2 Exchange Does Not Check Commodity, Documents or Designated Ports or Factories
The Exchange is under no obligation to:(a) check any Commodity or document received from or delivered through a Clearing Member in relation to an obligation to make or take delivery under an open deliverable Futures Contract; or(b) check the availability or suitability of any Designated Ports, factories, surveyors, samplers, analysts or other organisations or marks as identified in the relevant Contract Specifications.
The Exchange disclaims any liability and does not in any way guarantee quality or suitability of fitness of any Commodity, document, Designated Port, factory, surveyor, sampler, analyst or other organisation or marks.
5.3.3 Forged Documents
The Exchange accepts no liability with respect to any claim arising from:(a) forged or irregular documents relating to a deliverable Futures Contract cleared through a Clearing Member; or(b) any non-fulfilment of an open deliverable Futures Contract arising from such forgery.