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Silly question, but how is the delivery of gold COMEX's problem? I was under the impression futures (and derivatives in general) represent an obligation of who
by username332211 2y ago
Silly question, but how is the delivery of gold COMEX's problem?
I was under the impression futures (and derivatives in general) represent an obligation of whomever sold the future contract. Why is the exchange responsible for delivering all of a sudden?
- jdsully 2y agoThe role of the exchange is to facilitate orderly markets by reducing counterparty risk. My knowledge is more stock market than commodities but normally they require collateral from the brokers so that they can recover from the broker, but ultimately they would be on the hook if they failed at their risk management. In reality though we know the government would not let a major exchange fail so there's also that unwritten rule.