What it means
A futures trade creates an obligation under standardised rules, and most positions are offset before physical settlement. Positions retained into delivery enter a separate process, and the delivery notice is one of the communications that makes that process operational.
The short position generally initiates delivery under the relevant procedure, and clearing arrangements then identify the long position assigned to receive it. The exact sequence varies by product.
CME's Treasury process distinguishes intention day, notice day and delivery day, and its grain process also describes notice and invoicing within a multi-day delivery cycle. Those stages should not be merged into one event, because a notice can inform the recipient that a delivery obligation is coming before the asset or document is transferred, and funds and receiving arrangements may need to be ready during that interval.
The notice identifies information required by the contract, which can include the deliverable security or commodity documentation, quantity and invoice details. A generic email stating that goods are available is not necessarily a valid exchange delivery notice.
For Treasury futures, the selected eligible security affects the invoice calculation through conversion factors and accrued interest, so the quoted contract price alone is insufficient to determine the final payment. For grain contracts, a shipping certificate or warehouse receipt can be involved, and the notice does not necessarily mean that trucks will arrive immediately.
The recipient should understand the document's rights, storage charges and later loading arrangements. Notice deadlines matter because exposure can become operational before final trading ends, and a trader unable to fund or receive delivery should check the broker's instructions early.
A broker may have stricter requirements than the exchange's final deadline, since client risk policies, account permissions and funding procedures can affect whether a position may remain open. Permission to trade futures is not automatically permission to take delivery.
The recipient should reconcile the notice with its own records, because an unexpected notice may indicate a booking error or a position that was assumed to be closed but remains open. Operational teams should know who receives and acts on the communication, with treasury monitoring the position, finance preparing payment and logistics handling goods or documents.
The notice is evidence within a process, not proof that every contractual obligation has been performed, so actual transfer, accepted documents and payment still need confirmation. For a non-finance manager, ask what the notice requires the business to do, by when and through which account, and separate notification, invoicing and completed settlement.
In practice
Real-world examples.
Example
A grain futures holder receives notification of an assigned delivery and an invoice. Operations checks the shipping certificate and storage terms rather than expecting an immediate physical shipment, and finance confirms funds will be available on the payment date.
Example
A Treasury futures short identifies an eligible security on notice day. Finance calculates the invoice using the relevant price, conversion factor and accrued interest before the transfer stage, and compares the result with the clearing statement.
Example
A company receives a notice for a maturity it thought treasury had closed. Reconciliation finds that the offset used a different month, leaving the original contract open, and the team works with its broker on the permitted next steps.
Formula
Calculation
Quantity to receive = Contracts assigned x Units per contract
Worked example. A notice assigns two contracts of 1,000 illustrative units each, so the receiving obligation is 2 x 1,000 = 2,000 units. If the invoice price is $8 per unit, the expected invoice is 2,000 x $8 = $16,000.
Compare the 2,000 units and the $16,000 with the internal position record and the invoice received. Actual product multipliers and settlement methods must come from the contract rules.Case study
Seen in the real world.
Fictional case: A manufacturing company's broker sends a grain delivery notice to treasury while the responsible dealer is away. A backup reviewer checks the maturity and realises the business has no receiving plan. The team contacts the broker, confirms the actual status and coordinates finance and logistics within the applicable procedure. It then changes its internal process so delivery notices reach a monitored mailbox with a named owner.
The lesson is about operational readiness, not a promise that any notice can be reversed. The company, called Brightfield Foods in this illustrative story, also added a monthly check of open futures positions against its hedging plan, so any contract still open near its delivery period is flagged to treasury, finance and logistics at the same time. Over the next year no unexpected notices arrived, and the monitored mailbox was tested each quarter with a dummy message.
Watch out
Common mistakes.
- Treating a delivery notice as proof that goods have already been received.
- Assuming all futures products use identical notice timing and contents.
- Leaving funding and receiving arrangements until after an assigned delivery notification.
Questions
People also ask.
Is a notice the actual delivery?
No. It identifies a stage before or within the settlement process.
Can the broker set earlier deadlines?
Yes. Account and risk requirements can be stricter than final exchange deadlines.
Should finance reconcile the notice?
Yes. Product, maturity, quantity and payment details need checking.
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