Delivery Notice

What Is a Delivery Notice?

A delivery notice is a formal notice submitted by the holder of an eligible short futures position to state that it intends to settle the contract by delivering the specified underlying asset.

In cryptocurrency markets, a delivery notice may begin the process of transferring a defined quantity of digital assets under the rules of a physically settled crypto futures contract.

The notice is normally submitted through a clearing member or another approved intermediary to the clearing organization responsible for settlement.

The clearing organization then assigns the delivery obligation to an eligible holder of an open long position.

The CFTC futures glossary describes a notice of intent to deliver as the seller’s notice that it intends to deliver the underlying commodity against an open short futures position.

A delivery notice is relevant mainly to physically settled futures rather than cash-settled futures or perpetual contracts.

It is not a wallet deposit alert, blockchain transaction notification, shipping document, token transfer message, or general notice that a cryptocurrency payment has arrived.

Its exact legal effect depends on the futures contract specifications, clearing rules, intermediary policies, and applicable law.

Why Is a Delivery Notice Necessary?

A physically settled futures contract creates a possible obligation to exchange the underlying asset when the contract reaches its settlement period.

The delivery notice provides a standardized way for the short side to begin that settlement process.

It tells the clearing organization that the seller is prepared to provide the deliverable asset according to the contract’s rules.

The clearing organization can then identify a long position that must provide payment and accept delivery.

This process avoids requiring each long trader to negotiate directly with an unknown short trader.

It also creates a documented timeline for assignment, payment, asset transfer, reconciliation, and completion.

For cryptocurrency contracts, the process can help coordinate custody accounts, approved wallets, blockchain transfers, confirmation requirements, and settlement records.

Who Submits a Delivery Notice?

The holder of an eligible open short futures position initiates the delivery notice.

A short futures position represents the selling side of the contract.

When physical settlement occurs, the short side must provide the contract’s specified quantity and form of the underlying asset.

The short trader usually does not send the notice directly to an individual long trader.

Instead, the notice moves through the trader’s approved intermediary and clearing member to the clearing organization.

The clearing member may verify that the seller has the required asset, custody arrangements, authorization, and operational ability before accepting the instruction.

A customer who is not approved to make delivery may be required to close the position before the notice process begins.

Who Receives a Delivery Notice?

The clearing organization first receives and processes the notice.

It then assigns the notice to a clearing member carrying one or more eligible long positions.

The clearing member allocates the assignment to the appropriate customer or proprietary account under its procedures.

The assigned long position becomes responsible for accepting the asset and providing the required payment or settlement consideration.

The original short and assigned long may never communicate directly.

The clearing structure manages their obligations according to standardized rules.

How a Delivery Notice Process Works

The process begins when a physically settled futures contract enters its permitted notice period.

An eligible short position holder submits a notice of intent to deliver before the applicable cutoff.

The clearing member checks the notice and sends it to the clearing organization.

The clearing organization validates the submission and assigns it to an eligible long position.

The assigned long prepares the required payment and delivery account.

The short prepares the specified cryptocurrency or approved delivery instrument.

The asset and payment are transferred according to the contract’s settlement schedule.

The clearing organization and participating firms reconcile the transaction and confirm that the obligation has been completed.

The number of days between notice and final delivery varies by contract.

What Information Can a Delivery Notice Contain?

A delivery notice may identify the futures contract, maturity month, number of contracts, asset quantity, delivery date, and clearing account.

It may also contain an invoice price, settlement amount, delivery location, custodian, or approved account instructions.

For a cryptocurrency future, the notice process may identify an approved custody system or wallet-transfer method.

Some delivery details may be transmitted through separate settlement instructions rather than appearing in one document.

The notice must follow the format and submission method required by the applicable clearing rules.

An incomplete or late notice may be rejected or moved to a later eligible processing date.

Delivery Notice Versus Delivery Notice Period

A delivery notice is the actual formal submission that begins a particular delivery obligation.

The delivery notice period is the window during which eligible notices may be submitted.

One is a document or electronic instruction, while the other is a span of time.

The notice period normally begins on first notice day and ends on last notice day.

A seller may choose a permitted notice day within that period according to the contract rules.

The exact delivery date may occur after the notice is issued.

What Is First Notice Day?

First notice day is the first day on which delivery notices may be received for an expiring futures contract.

A long position that remains open on or after this point may become eligible for delivery assignment.

First notice day does not always occur on the final trading day.

It may occur while the contract can still be traded.

The CFTC’s official definition of first notice day emphasizes that the date can vary among commodities and contract rules.

A trading intermediary may set an internal closing deadline before the official first notice day.

What Is Last Notice Day?

Last notice day is the final day on which an eligible short position can issue a delivery notice for the contract.

The asset transfer may occur after this date if the settlement schedule allows additional processing time.

Last notice day should not be confused with the last trading day.

The two dates may be identical for one contract and different for another.

A trader must check the actual contract calendar rather than relying on a general market convention.

Delivery Notice Versus Last Trading Day

The last trading day is the final day on which the expiring futures contract can normally be bought or sold.

A delivery notice is an instruction to begin physical settlement.

A contract can enter its notice period before trading ends.

This means a long trader may face assignment even though the contract still appears tradable.

Closing a futures position after assignment does not necessarily cancel a delivery obligation that has already been created.

Traders who do not want delivery should act before their applicable assignment deadline.

Delivery Notice Versus Expiration

Expiration refers to the end of a derivative contract’s trading or contractual life under its specifications.

A delivery notice may be issued before, on, or near expiration depending on the contract.

Physically settled futures often require several separate dates because the asset transfer cannot always be completed instantly.

These dates may include first notice day, last notice day, last trading day, assignment day, settlement day, and final delivery day.

Using only the displayed expiration date can therefore expose a trader to an unexpected delivery obligation.

Delivery Notice Versus Delivery Instrument

A delivery notice announces the short holder’s intention to deliver.

A delivery instrument is the document, receipt, certificate, entitlement, or other approved item used to transfer ownership or control of the commodity.

For traditional physical commodities, the delivery instrument may represent goods stored in an approved facility.

For cryptocurrency, delivery may instead involve a custodial book entry or a blockchain transaction.

The notice begins the process, while the delivery instrument or asset transfer helps complete it.

Physically Settled Crypto Futures

A physically settled crypto future requires delivery of the underlying digital asset under the contract’s terms.

A contract representing one unit of a cryptocurrency may require the short to provide one eligible unit for each contract delivered.

The long must provide the payment amount calculated under the settlement rules.

Delivery may occur through an approved custodian rather than directly between personal wallets.

The contract should identify the deliverable asset, quantity, quality requirements, settlement currency, and transfer method.

The federal guidance for physically delivered futures contracts states that contract terms should support reliable delivery and promote convergence between futures and underlying market values.

Cash-Settled Crypto Futures

A cash-settled crypto future does not require delivery of the underlying digital asset.

It uses a final reference price to calculate the gain or loss that must be credited or debited.

The contract may settle in conventional currency, stable-value assets, or another defined settlement unit.

Because the underlying cryptocurrency is not delivered, the ordinary delivery-notice process is generally unnecessary.

A cash-settled contract can still have an expiration date, final valuation period, last trading day, and final settlement price.

A final price calculation should not be confused with a delivery notice.

Delivery Notice Versus Perpetual Contracts

A true perpetual contract does not have a fixed expiration date.

It normally remains open until the position is voluntarily closed, liquidated, or ended through another contractual mechanism.

Perpetual contracts commonly use funding payments to maintain a relationship with their underlying reference market.

Because they do not mature into a scheduled physical delivery, ordinary perpetual contracts generally have no delivery notices.

The CFTC’s 2026 digital commodity perpetual futures materials distinguish true perpetual structures from contracts that retain fixed expiration dates.

A product’s actual specification remains more important than the marketing name used to describe it.

Crypto Delivery Through a Custodian

Some physically settled crypto contracts complete delivery through accounts maintained by an approved custodian.

The seller’s account is debited for the deliverable cryptocurrency.

The buyer’s account is credited with the corresponding amount.

This internal book-entry process may avoid sending a separate blockchain transaction for every delivery.

It can reduce transfer delays and address-entry errors.

It also creates dependence on the custodian’s security, accounting, solvency, access controls, and withdrawal procedures.

Receiving a custodial credit does not always mean the cryptocurrency can be withdrawn immediately to a personal wallet.

Crypto Delivery Through an Onchain Transfer

A contract may permit or require delivery through a blockchain transaction.

The short or its custodian sends the specified cryptocurrency to an approved address.

The settlement system monitors the blockchain for the transaction and required confirmation level.

The transfer must use the correct blockchain, asset, address, and amount.

A payment sent through the wrong network may be technically valid but fail to satisfy the futures delivery obligation.

Onchain transfers can also be delayed by congestion, insufficient transaction fees, wallet outages, or network instability.

Blockchain Confirmations

A broadcast cryptocurrency transaction may not be treated as final immediately.

The delivery rules may require a specified number of blockchain confirmations.

Confirmations reduce the risk that the transaction will be removed or replaced through a chain reorganization.

The required number can depend on the network, transfer size, risk policy, and settlement deadline.

A transaction remaining unconfirmed after the cutoff can create a delivery failure even when the sender submitted it earlier.

Participants should provide enough time and appropriate network fees for confirmation.

Wallet Address Risk

Blockchain transfers may be irreversible after confirmation.

A mistyped or maliciously replaced address can send the deliverable asset to an unintended destination.

Settlement teams should verify complete addresses through an approved independent process.

Large transactions may require approval from multiple authorized people.

Clipboard malware can replace a copied crypto address without creating an obvious warning.

No legitimate delivery notice requires a trader to reveal a private key or recovery phrase.

Forks and Airdrops

A blockchain can split, upgrade, freeze transfers, or distribute an additional token during a delivery period.

The contract rules should identify which chain and version of the asset qualify for delivery.

They should also explain whether forked assets, airdrops, staking rewards, or other distributions belong to the long, short, custodian, or clearing system.

A futures position does not automatically provide every benefit associated with holding the underlying cryptocurrency directly.

Emergency rules may allow settlement procedures to be delayed or modified during a serious blockchain event.

What Happens After a Short Issues a Delivery Notice?

The short position becomes connected with an active delivery process after the notice is accepted.

The short must maintain access to the required amount of eligible cryptocurrency.

The asset may need to be deposited with an approved custodian before the delivery date.

The seller may no longer be able to cancel the obligation by simply buying an offsetting futures contract.

Failure to provide the asset can trigger default procedures, penalties, replacement purchases, or account restrictions.

What Happens When a Long Is Assigned?

The assigned long must normally provide payment and accept the specified asset.

The required payment can be much larger than the margin originally deposited to hold the futures position.

The trader may need an approved delivery account or custody arrangement before settlement.

An assigned customer who cannot provide the required funds may face forced liquidation or default procedures.

A trader should not remain long during the assignment period unless the account is prepared to receive delivery.

How Are Delivery Notices Assigned?

The clearing organization assigns notices according to its published procedures.

It may allocate notices based on position age, random selection, proportional methods, clearing-member positions, or another stated process.

The clearing member then decides which eligible customer account receives the assignment under its policies.

A customer cannot safely assume that another long trader will be selected.

Every eligible open long position should be treated as capable of receiving a notice.

Can a Delivery Notice Be Canceled?

A notice usually becomes binding after it has been accepted by the clearing system.

Cancellation may be available only before a cutoff or with approval from the relevant parties.

Some rulebooks allow correction of clerical errors under limited conditions.

A trader should not submit a delivery notice until the asset, account, and settlement instructions have been verified.

Buying an offsetting futures position after notice submission does not necessarily reverse the delivery.

What Is Retendering?

Retendering is a contract-specific process that may allow an assigned long to return a delivery notice for reassignment.

The procedure may require the long to establish an offsetting short position.

It may also require a fee and compliance with a strict deadline.

Not every physically settled futures contract permits retendering.

A trader should never rely on retendering as the main plan for avoiding an unwanted crypto delivery.

Closing a Position Before Delivery

A long trader can normally avoid delivery by selling the same number of contracts in the same maturity before the relevant deadline.

A short trader can normally avoid delivery by buying the same number of contracts in the same maturity.

The offsetting transaction should reduce the net position to zero.

Opening an opposite position in a different expiration month does not close the expiring contract.

The account should be checked after execution to confirm that no residual position remains.

Rolling a Crypto Futures Position

Rolling means closing an expiring futures position and opening a similar position in a later maturity.

A long trader sells the near-term contract and buys a later contract.

A short trader buys the near-term contract and sells a later contract.

The difference between the two contract prices creates a roll cost or benefit.

Rolling preserves market exposure while moving the position away from the current delivery process.

The roll must be completed before the trader’s delivery-assignment deadline.

Intermediary Deadlines

A trading intermediary may require customers to close positions before the official first notice day.

This policy protects customers who lack the funds, digital assets, custody accounts, or operational ability to complete delivery.

The intermediary may liquidate a position automatically when the customer misses its deadline.

Forced liquidation can occur during limited liquidity and may produce an unfavorable price.

Traders must follow both the contract calendar and their account provider’s earlier operational deadlines.

Margin Versus Delivery Payment

Futures margin is collateral supporting the position’s market risk.

It is not necessarily the complete amount required to pay for the delivered cryptocurrency.

A long trader may need to provide the full invoice amount before receiving the asset.

A short trader must provide the complete deliverable quantity even when the futures position required only a fraction of its value as margin.

Margin requirements may also increase as delivery approaches.

An account that appears sufficiently funded for ordinary trading may be unprepared for settlement.

What Is the Invoice Price?

The invoice price is the amount used to determine the payment owed for the delivered asset.

It may be based on a futures settlement price, delivery price, contract multiplier, and other adjustments.

A cryptocurrency delivery can be invoiced in conventional currency, a stable-value asset, or another settlement unit.

The invoice calculation should be stated in the contract specifications.

Fees, rounding, and transfer costs may be handled separately.

Delivery Accounts and Customer Funds

Physical delivery can require property and payment to move through accounts that are separate from the ordinary futures trading account.

Current U.S. rules for physical-delivery property describe the use of delivery accounts when an intermediary facilitates asset and payment transfers outside the account in which the futures contract was held.

The operational structure can affect custody, segregation, insolvency treatment, and the timing of asset availability.

Customers should understand where cryptocurrency will be held before and after delivery.

Delivery Failure

A delivery failure occurs when the responsible party does not provide the asset, payment, documentation, or valid settlement instructions by the required time.

The clearing organization can use collateral and default procedures to address the failure.

It may acquire replacement assets, liquidate positions, impose penalties, suspend participation, or allocate losses according to its rules.

A wrong-chain transfer or payment to an unapproved wallet may be treated as nonperformance.

The party can remain liable even when the incorrectly transferred cryptocurrency cannot be recovered.

Force Majeure and Emergency Procedures

Force majeure refers to extraordinary events beyond normal control that prevent contractual performance.

Possible crypto-related events include a prolonged blockchain outage, transfer freeze, protocol failure, network attack, or government restriction.

Contract rules may allow a clearing organization to delay delivery, change procedures, use an alternative price, or take another emergency action.

Force majeure treatment is not automatic merely because settlement becomes expensive or inconvenient.

The governing rulebook determines which events qualify and what remedies are available.

Delivery Notices and Price Convergence

A credible delivery process helps connect a futures price with the value of the underlying cryptocurrency.

When futures trade far above the deliverable asset, market participants may buy the cryptocurrency and hold short futures positions for delivery.

When futures trade far below the underlying asset, eligible participants may seek to take delivery through long positions.

These activities can encourage the prices to move closer together as maturity approaches.

Custody costs, transfer restrictions, liquidity, financing, and delivery rules can prevent perfect convergence.

Delivery Squeeze Risk

A delivery squeeze can occur when short position holders need an asset that has become difficult to obtain in deliverable form.

A cryptocurrency may have substantial total supply while only a limited amount is available through approved custody channels.

Large long positions can create pressure when eligible delivery supply is restricted.

Position limits, market surveillance, emergency authority, and supply analysis may reduce this risk.

They cannot guarantee that delivery will remain inexpensive or easily available.

Delivery Notice Versus Regulatory Actual Delivery

The phrase actual delivery can also appear in rules concerning certain leveraged retail commodity transactions.

That legal concept is different from a futures delivery notice.

A futures delivery notice is created by the contract and clearing process for physically settled futures.

Regulatory actual delivery examines whether a customer receives sufficient possession and control of an asset in another type of transaction.

In December 2025, the CFTC withdrew its older virtual-currency actual-delivery guidance and stated that updated guidance or frequently asked questions might be considered.

This withdrawal did not remove the contract-specific delivery-notice process used by physically settled futures.

Tax and Accounting Considerations

Receiving cryptocurrency through futures delivery can create accounting and tax consequences.

The delivered asset may need a cost basis based on the applicable contract, invoice, fees, and tax rules.

Closing, rolling, or settling the futures position may also create a reportable gain or loss.

Later selling or spending the delivered cryptocurrency can create another taxable event.

The IRS digital asset information page states that digital-asset income and transactions may need to be reported.

Tax treatment depends on the taxpayer, contract, jurisdiction, business activity, and applicable classification.

Participants should preserve delivery notices, invoices, wallet records, transaction identifiers, fees, and settlement statements.

Delivery Notice Security

Delivery instructions can become targets for phishing, account compromise, and payment redirection.

Attackers may impersonate support staff or settlement personnel and request a transfer to a new wallet.

Every change in settlement instructions should be verified through an independent approved channel.

Private keys and recovery phrases should never appear in a delivery notice.

Accounts should use strong authentication, restricted permissions, and transaction approval controls.

The CISA phishing guidance recommends treating urgent or unexpected requests for credentials and payments with caution.

Delivery Notice Checklist for Crypto Traders

Confirm that the contract is physically settled rather than cash settled.

Record the first notice day, last notice day, last trading day, expiration, assignment date, and delivery date.

Check whether the intermediary imposes an earlier position-closing deadline.

Calculate the total cryptocurrency quantity represented by the open contracts.

Confirm the approved asset, blockchain, custodian, wallet method, and settlement currency.

Determine the funds required to accept delivery or the assets required to make delivery.

Review blockchain confirmation, network-fee, fork, airdrop, and emergency rules.

Verify all wallet addresses and settlement instructions independently.

Decide whether to close, roll, make delivery, or accept delivery before the critical deadline.

Advantages of a Delivery Notice

A delivery notice creates a clear and standardized way to initiate physical settlement.

It allows a clearing organization to coordinate sellers and buyers who may not know each other.

It creates records of the asset quantity, contract, assignment, and settlement timeline.

It supports price convergence between physically settled futures and underlying cryptocurrency markets.

It can also help commercial users acquire or dispose of cryptocurrency through a defined derivatives process.

Limitations of a Delivery Notice

A delivery notice does not guarantee that settlement will occur without delay or dispute.

It cannot prevent blockchain congestion, custody failure, wallet mistakes, security incidents, or asset shortages.

Contract procedures differ, so knowledge of one notice system may not apply to another.

Retail traders can receive unexpected assignments when they misunderstand the first notice day.

Physical settlement can require substantially more capital and operational preparation than maintaining a margined futures position.

The notice process also does not remove market, counterparty, clearing, legal, or tax risk.

Frequently Asked Questions

What is a delivery notice in simple terms?

A delivery notice is a formal statement from a short futures position holder that it intends to deliver the contract’s underlying asset.

Is a delivery notice used in cryptocurrency trading?

Yes, it can be used when a crypto futures contract is settled through delivery of the underlying digital asset.

Who sends a delivery notice?

An eligible holder of an open short futures position initiates the notice through the applicable clearing process.

Who receives the delivery notice?

The clearing organization receives it and assigns the resulting obligation to an eligible long position.

Does the short deliver cryptocurrency immediately after sending the notice?

Not necessarily, because the contract may schedule actual payment and asset transfer several days after notice submission.

What is first notice day?

First notice day is the first day on which delivery notices can be received for a futures contract.

What is last notice day?

Last notice day is the final day on which eligible delivery notices can be issued.

Is first notice day the same as expiration?

No, first notice day can occur before the contract’s expiration or last trading day.

Is a delivery notice the same as a delivery notice period?

No, the notice is the formal instruction, while the notice period is the window in which the instruction may be submitted.

Is a delivery notice the same as a delivery instrument?

No, the notice announces delivery, while a delivery instrument or asset transfer completes the ownership or control transfer.

Do cash-settled crypto futures use delivery notices?

They generally do not because no underlying cryptocurrency must be delivered.

Do perpetual contracts use delivery notices?

Ordinary perpetual contracts generally do not because they have no fixed maturity or scheduled physical delivery.

Can a long futures trader receive cryptocurrency?

Yes, an assigned long can receive the specified digital asset when the contract is physically settled.

Can a short futures trader be required to provide cryptocurrency?

Yes, the short must provide the contract’s deliverable asset after initiating or becoming subject to physical settlement.

Can I avoid receiving delivery?

A long trader can normally close or roll the position before the applicable assignment deadline.

Can I avoid making delivery?

A short trader can normally close or roll the position before entering the binding delivery process.

What does rolling a futures contract mean?

Rolling means closing the expiring contract and opening a similar position in a later maturity.

Can an intermediary close my position before first notice day?

Yes, an intermediary may impose an earlier deadline when the account is not approved or prepared for delivery.

How is cryptocurrency physically delivered?

It may be transferred through an approved custodian, internal book entry, blockchain transaction, or another contract-defined method.

Do I need a personal wallet to receive delivery?

Not always, because some contracts require an approved custodial account instead of direct personal-wallet delivery.

How many blockchain confirmations are needed?

The required confirmation count depends on the contract, network, custodian, transfer size, and settlement policy.

Who pays the blockchain fee?

The contract or settlement procedures should identify which party bears network and transfer charges.

What happens if the wrong wallet address is used?

The transfer may be irreversible and may fail to satisfy the delivery obligation.

What happens during blockchain congestion?

The transfer may be delayed, and the contract’s disruption or default procedures may apply.

What happens if the blockchain forks?

The contract rules determine the recognized network, deliverable asset, and treatment of any resulting tokens.

Does a futures buyer receive airdrops?

Not automatically, because airdrop rights depend on the contract, custody, and settlement rules.

Can a delivery notice be canceled?

Cancellation may be limited or unavailable after the clearing system accepts the notice.

What is delivery assignment?

Delivery assignment is the allocation of a short seller’s notice to an eligible long futures position.

Can an assigned long reject the notice?

The assigned long normally must comply unless a specific retender or transfer procedure is available.

What is retendering?

Retendering is a contract-specific procedure that may allow an assigned notice to be returned for reassignment.

Is futures margin enough to accept delivery?

Not necessarily, because the buyer may need to provide the complete invoice amount rather than only margin.

What is an invoice price?

The invoice price is the contract-defined amount used to calculate payment for the delivered cryptocurrency.

What happens if the short cannot provide the asset?

Default procedures can include penalties, replacement purchases, collateral use, liquidation, or suspension.

Can delivery be completed through a custodial book entry?

Yes, some settlement systems transfer account entitlements internally instead of sending a separate blockchain transaction.

Will a delivery notice request my seed phrase?

No legitimate delivery process requires a wallet recovery phrase or private key.

Is regulatory actual delivery the same as a futures delivery notice?

No, regulatory actual delivery concerns a separate legal analysis for certain transactions, while a futures notice begins contract settlement.

Can receiving cryptocurrency through delivery affect taxes?

Yes, the futures settlement, acquisition basis, fees, and later disposal of the digital asset can create reporting consequences.

Why do many traders avoid the delivery process?

Many traders want price exposure rather than the funding, custody, and operational obligations of physical settlement.

What should I check before holding a contract into delivery?

Check every notice date, intermediary deadline, contract size, settlement method, payment requirement, custody rule, and blockchain procedure.

Conclusion

A delivery notice is a formal instruction from an eligible short futures position holder stating an intention to deliver the contract’s underlying asset.

In a physically settled crypto future, the process can result in the transfer of a specified quantity of cryptocurrency to an assigned long position.

The notice normally passes through a clearing member and clearing organization rather than directly between two traders.

First notice day determines when notices may begin, while last notice day determines when they may no longer be issued.

These dates can differ from the last trading day, expiration date, settlement date, and final delivery day.

Cash-settled futures generally do not use delivery notices because they settle through a financial adjustment.

True perpetual contracts generally do not use delivery notices because they lack fixed expiration and scheduled physical settlement.

Crypto delivery can occur through approved custody accounts, internal book entries, or blockchain transactions.

Blockchain settlement introduces additional risks involving wallet addresses, network fees, confirmations, forks, congestion, and irreversible transfers.

Long traders must prepare sufficient payment and custody capacity, while short traders must control enough eligible cryptocurrency to satisfy delivery.

Traders who do not want physical settlement should close or roll positions before the earliest applicable delivery deadline.

The contract specifications and intermediary policies remain the controlling sources because delivery-notice procedures are not universal across cryptocurrency futures.