What Is the Concept of ‘Deliverable Grade’ in Futures Contracts?

Deliverable grade refers to the specific quality and quantity standards that the underlying asset must meet to be accepted for physical delivery against a futures contract. These standards are precisely defined in the contract specifications by the exchange.

For example, a contract for gold futures will specify the required purity, while a contract for a cryptocurrency might specify the network on which the coin must be transferred. This standardization ensures that the delivered asset is acceptable to the buyer.