Settlement Price Definition

Below please find a definition of “Settlement Price”

Settlement Price: A price, based upon that day’s closing price or range of closing prices, used in determining the next day’s price limits, and in invoicing of deliveries to be made due to filing of notice of intention to deliver on that day.

Because there is often a range of closing prices in commodity trading, rather than a single closing price, and because the settlement price is based upon the closing range, it is also frequently used by the industry for a variety of other purposes, including:

(a) Analysis of closing market conditions

(b) Determining gains, losses, margin calls, and invoice prices for deliveries

(c) Calculating gains and losses in futures market accounts

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