What Are the Typical Penalties Imposed for a Delivery Default? ⎊ Path

What Are the Typical Penalties Imposed for a Delivery Default?

Penalties for a delivery default are typically severe and designed to deter non-compliance. They often include significant financial fines, the cost of the clearing house's forced open-market acquisition of the asset (which may involve slippage), and potentially the suspension or termination of the defaulting member's trading privileges.

The goal is to make the cost of default higher than the cost of compliance.

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Glossar

Delivery Default

Default ⎊ In the context of cryptocurrency derivatives and financial options, a delivery default signifies the failure of a party obligated to transfer an underlying asset ⎊ whether a cryptocurrency, token, or fiat currency ⎊ upon exercise of an option or settlement of a futures contract.