Meaning
Derivative settlement concludes a derivatives contract, fulfilling obligations between involved parties.Definition
It’s the mandatory process of closing outstanding derivative contracts, either by physical delivery of the underlying asset or via cash settlement.Settlement Methods
Settlement occurs via **physical delivery** (exchange of actual asset) or **cash settlement** (payment of price difference).Importance
Settlement ensures market integrity, reduces counterparty risk, and facilitates smooth derivatives market operation by guaranteeing financial obligations are met.Author
