Physical commodities brokerage
I still have a hard time understanding the difference between paper and physical and I wanted to know what exactly do physical commodities brokers do? Are forwards considered physical derivatives?
Thank you
no difference just paper doesn't have the physical delivery
on the brokerage side with physical trades the counterparties have to have doc's in place to trade with each other so smaller companies or credit strapped shops will have hard time finding a good bid/offer with a tradeable counterparty. this can make it difficult for a broker trying to find both sides of the trade.
This doesn't happen with financial brokerage since all deals are exchange cleared
Good response, may help if you give us an idea of what you looking/confused about. We can then explain how settlement works.
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