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What Happens If a Trader Defaults on Their Obligation to Deliver a Physically-Settled Asset?

The clearing house uses the defaulting trader's margin and may buy the asset on the spot market to ensure delivery to the solvent party.
Greeks.Live28.10.25

What Happens If a Trader Defaults on Their Obligation to Deliver a Physically-Settled Asset?

If a trader defaults on a physically-settled contract, the clearing house steps in. The clearing house will typically use the defaulting trader's margin to cover the financial loss.

It may then enter the spot market to purchase the required asset (e.g. Bitcoin) and deliver it to the non-defaulting counterparty.

This ensures the integrity of the contract and protects the solvent trader.

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