Are Most Interest Rate Futures Contracts Physically or Cash-Settled? ⎊ Path

Are Most Interest Rate Futures Contracts Physically or Cash-Settled?

Most major interest rate futures contracts are cash-settled. For example, futures on short-term interest rates (like Eurodollar futures) or long-term Treasury bonds are settled in cash.

Physical delivery of the underlying security (like a specific bond) would be highly complex due to the multitude of deliverable bonds. Cash settlement based on a final settlement price or index is far more efficient and practical for managing interest rate risk.

How Does a Cash-Settled Futures Contract Differ from a Physically-Settled One in This Context?

What Is a ‘Cash-Settled’ Vs. ‘Physically-Settled’ Futures Contract?

What Is the Difference between a Cash-Settled and a Physically-Settled Futures Contract?

What Is the Difference between “Cash-Settled” and “Physically-Settled” Crypto Futures?

What Is the Difference between Cash-Settled and Physically-Settled Futures Contracts?

What Is the Difference between Cash-Settled and Physically-Settled Futures?

How Does the Settlement Process Differ between Cash-Settled and Physically-Settled Futures?

How Do the Delivery Mechanisms Differ between Physically Settled and Cash-Settled Futures Contracts?

Glossar

Interest Rate Futures

Calibration ⎊ Interest rate futures, within cryptocurrency derivatives, function as forward contracts specifying an exchange rate for a notional principal amount, typically linked to a benchmark like SOFR or LIBOR, though increasingly adapted to decentralized finance (DeFi) lending rates.

Final Settlement Price

Valuation ⎊ The Final Settlement Price in cryptocurrency derivatives represents the agreed-upon value of the underlying asset at contract expiration, crucial for determining payouts in options and futures.