How does expiry of futures work?

[Panaman]

Asking as I was not aware that the June Spi finished today so although I don’t own a contract if I had I would have been caught, so what would happen? All I can find is that its cash settled but what does that mean?

If I had bought a contract at say 5400 and the final settlement price is 5434, my account would be credited with the difference?, that is 34 x $25, so $850 minus brokerage, then would there be broker penalty’s or charges for this other than brokerage and would I have to wait until the end of June to get the money?

Could someone explain

 

[payday]

Asking as I was not aware that the June Spi finished today so although I don’t own a contract if I had I would have been caught, so what would happen? All I can find is that its cash settled but what does that mean?

If I had bought a contract at say 5400 and the final settlement price is 5434, my account would be credited with the difference?, that is 34 x $25, so $850 minus brokerage, then would there be broker penalty’s or charges for this other than brokerage and would I have to wait until the end of June to get the money?

Could someone explain

Depends on your broker I suppose, but with mine (Interactive Brokers) they just close it out and I get creditted with the cash minus brokerage fees and no penalties.

 

[skc]

Asking as I was not aware that the June Spi finished today so although I don’t own a contract if I had I would have been caught, so what would happen? All I can find is that its cash settled but what does that mean?

If I had bought a contract at say 5400 and the final settlement price is 5434, my account would be credited with the difference?, that is 34 x $25, so $850 minus brokerage, then would there be broker penalty’s or charges for this other than brokerage and would I have to wait until the end of June to get the money?

Could someone explain

http://www.asx.com.au/products/index-derivatives/asx-index-futures-contract-specifications.htm

 

[Beej]

Asking as I was not aware that the June Spi finished today so although I don’t own a contract if I had I would have been caught, so what would happen? All I can find is that its cash settled but what does that mean?

If I had bought a contract at say 5400 and the final settlement price is 5434, my account would be credited with the difference?, that is 34 x $25, so $850 minus brokerage, then would there be broker penalty’s or charges for this other than brokerage and would I have to wait until the end of June to get the money?

Could someone explain

In the case of a cash settled futures contract like the SPI, it works pretty much as you state there. There normally shouldn't be any penalty for holding until expiry, and in fact you might even save on trading fees as there is no need to execute a trade to exit your position - it is closed out for you and settled automatically via the exchange clearing house and broker. In terms of timing it should only take a few days to get cleared funds after the last trading day of the contract.

However, for non cash contracts - typically soft and hard commodities like Wheat, Coffee, Gold, etc, holding to expiry will result in physcial delivery to you (or an obligation for you to deliver if you were short!) of the underlying commodity in the specified quantity, grade etc, and to a location, as specified by the contract. If you are a not an actual producer or consumer of that commodity, this could prove somewhat problematic, and costly