Editing Futures exchange (section)

==Role in futures contracts standardization==
Futures exchanges establish standardized contracts for trading on their trading venues, and they usually specify the following: assets to be delivered in the contract, delivery arrangements, delivery months, pricing formula for daily and final settlement, contract size, and price position and limits.<ref>{{cite book|title=Options, Futures, and Other Derivatives|pages=22–28|publisher=Pearson|last=Hull|first=John C.|edition=9|year=2015}}</ref> For assets to be delivered, futures exchanges usually specify one or more grades of a commodity acceptable for delivery and for any price adjustments applied to delivery. For example, the standard deliverable grade for CME Group's corn futures contract is "No. 2 Yellow", but holders of short positions in the contract can deliver "No. 3 Yellow" corn for 1.5 cents less than the contract delivery price per [[bushel]].<ref>{{cite book|title=Options, Futures, and Other Derivatives|page=26|publisher=Pearson|last=Hull|first=John C.|edition=9|year=2015}}</ref> The locations where assets are delivered are also specified by the futures exchanges, and they may also specify alternative delivery locations and any price adjustments available when delivering to alternative locations. Delivery locations accommodate the particular delivery, storage, and marketing needs of the deliverable asset. For example, ICE frozen concentrate orange juice contracts specify delivery locations as exchange-licensed warehouses in Florida, New Jersey, or Delaware,<ref name=HullP27>{{cite book|title=Options, Futures, and Other Derivatives|page=27|publisher=Pearson|last=Hull|first=John C.|edition=9|year=2015}}</ref> while in the case of CME [[live cattle]] contracts, delivery is to exchange-approved livestock yards and slaughter plants in the Midwest.<ref>{{Cite web|url=https://www.cmegroup.com/trading/agricultural/livestock/livestock-delivery-overview.html|title=Live Cattle Delivery Map|publisher=CME Group|access-date=2020-05-09|archive-date=2020-08-08|archive-url=https://web.archive.org/web/20200808152312/https://www.cmegroup.com/trading/agricultural/livestock/livestock-delivery-overview.html|url-status=live}}</ref> The futures exchange also determines the amount of deliverable assets for each contract, which determines a contract's size. Contract sizes that are too large will dissuade trading and hedging of small positions, while contract sizes that are too small will increase transaction costs since there are costs associated with each contract. In some cases, futures exchanges have created "mini" contracts to attract smaller traders. For example, the CME Group's Mini Nasdaq 100 contract is on 20 times the Nasdaq 100 index.<ref name=HullP27/>