Trading at Settlement (TAS) for Metals Futures

Liquid TAS markets for Metals contracts

Trading at Settlement (TAS) allows you to buy or sell an eligible futures contract during up to 10 tickets higher or lower than the current day’s settlement price.

Metals futures traders frequently incorporate TAS transactions into their trading strategies, executed for outright, spread, or block trades. At CME Group, TAS Metals trades are available for execution on CME Globex and can be submitted for clearing to CME ClearPort as a block trade.

Recent Trends

TAS trading has been increasing consistently, especially during the past year, as the mechanism permits commercial and financial traders to lock in a settlement price along the forward curve. TAS can also be used to hedge the average monthly price.

An average daily volume (ADV) record of 3,905 contracts in Gold futures TAS was reached in May, up nearly 250% year-over-year (YoY). In August, Silver TAS volume grew over 150% YoY.

Source: CME Group

Similarly, TAS volume in Copper futures has increased over the past several years, reaching a record ADV of 4,481 contracts in August.

Source: CME Group

Each metals futures contract has a specific listing of TAS eligible contract months. A month becomes the spot (delivery) month on the second last business day of the month prior to the contract month. The same methodology is followed for all Metals TAS products. TAS is also available for spread transactions between TAS eligible contract months.

Contract

Contract code

Summary

When the contract month becomes the spot month…

…these contract months are TAS-eligible

Gold Futures

GCT

TAS transactions are permitted in the first, second, third, and fourth active contract months.

 

The active contract months are February, April, June, August, and December.

February

April, June, August, December

April

June, August, December, February

June

August, December, February, April

August

December, February, April, June

December

February, April, June, August

Micro Gold futures

MGT

TAS transactions are permitted in the first, second, and third active contract months.

The active contract months are February, April, June, August, and December.

February

April, June, August

April

June, August, December

June

August, December, February

August

December, February, April

December

February, April, June

Silver futures

SIT

For Silver Futures, TAS transactions are permitted in the first, second, third and fourth active contract months.

The active contract months March, May, July, September, and December.

March

May, July, September, December

May

July, September, December, March

July

September, December, March, May

September

December, March, May, July

December

March, May, July, September

Platinum futures

PLT

TAS transactions are permitted in the first and second active contract months.

The active contract months are January, April, July, and October.

January

April, July

April

July, October

July

October, January

October

January, April

Palladium futures

PAT

TAS transactions are permitted in the first contract month.

The active contract months are March, June, September, and December.

March

June

June

September

September

December

December

March

Copper futures

HGT

TAS transactions are permitted in the first, second, third, and fourth active contract months.

The active contract months are March, May, July, September, and December.

 

For Copper futures, TAS is also eligible in the spot month, known as TAS zero or TAS flat. Spot month TAS trades are only permitted at the settlement price.

March

May, July, September, December

May

July, September, December, March

July

September, December, March, May

September

December, March, May, July

December

March, May, July, September

Example of a TAS transaction

For Gold Futures, the minimum price fluctuation or tick size is 10 cents per troy ounce. A trader can enter the following TAS order, relative to the current day’s as yet unknown Gold Futures settlement price:

  • At a price of 0 to trade at the Gold Futures settlement price
  • At a price between +1 to +10 to trade at the Gold Futures settlement price plus one to ten ticks, i.e., the settlement price plus $0.10 to $1.00 per troy ounce
  • At a price between -1 to -10 to trade at the Gold Futures settlement price minus one to ten ticks, i.e., the settlement price minus $0.10 to $1.00 per troy ounce

For Copper Futures, the minimum price fluctuation or tick size is $.0005 per pound.  A trader can enter the following TAS order, relative to the current day’s as yet unknown Copper futures settlement price:

  • At a price of 0 to trade at the Copper futures settlement price
  • At a price between +5 to +50 to trade at the Copper futures settlement price plus one (5) to 10 (50) ticks. i.e., the settlement price plus $0.0005 to $0.0050 per pound
  • At a price between -5 to -50 to trade at the Copper futures settlement price minus one (5) to 10 (50) ticks. i.e., the settlement price minus $0.0005 to $0.0050 per pound.

What do values represent when trading TAS?

All metals TAS products are tradeable +/- 10 ticks from the current day’s settlement price with the exception of spot month Copper Futures, which is only tradeable at TAS zero or TAS flat.

In all Gold, Silver, Micro Gold, Platinum and Palladium TAS products, one tick is represented by the numerical 1, and are tradable in a range of -10/+10. 

In Copper TAS products, one tick is represented by the numerical 5, and is tradeable in a range of -50/+50.

Tick values are represented as follows:

Minimum TAS Fluctuations (Tick Size)

Future

Minimum TAS Increment

Translated Tick

Gold

1

$ 0.10

Micro Gold

1

$ 0.10

Silver

1

$ 0.001

Platinum

1

$ 0.10

Palladium

1

$ 0.10

Copper

5

$ 0.0005

 

Example: 2 Minimum Ticks Over Settlement

Future

Traded TAS Value

Translated Tick

Gold

2

$ 0.20

Micro Gold

2

$ 0.20

Silver

2

$ 0.002

Platinum

2

$ 0.20

Palladium

2

$ 0.20

Copper

10

$ 0.0010

 

TAS Block Trades

TAS-eligible Metals futures contracts can be executed as a block trade and assigned the current day’s settlement price, or any valid price increment +/-10 ticks.

Minimum block threshold for TAS (in contracts)

Gold

Micro Gold

Silver

Platinum

Palladium

Copper

 

 

 

 

 

If the contract month was previously TAS eligible:

25

25

25

10

10

  • First and second active months: 20
  • Third and fourth active months: 5
  • Spot month: 5

If the spot month was not previously TAS-eligible, block trades are not permitted.

TAS block trades may be reported to the Exchange electronically via CME Direct/CME ClearPort, or by email to the CME Global Command Center (GCC) – ClearPort Facilitation Desk GCC@cmegroup.com.

When submitting a TAS block via CME Direct/CME ClearPort, the price information is entered as a price differential within the allowable range (i.e. plus or minus ten ticks) from the settlement price. For example, the price differential to be entered in CME Direct/CME ClearPort for a TAS Gold Futures block trade should be in the -$1.00 to +$1.00 per troy ounce range which represents +/- 10 ticks.

TAS Block Trades

TAS transactions can be used for many trading practices, including to manage exposure to average settlement prices.

On October 15, a copper producer agreed to sell 500,000 pounds (20 lots) of copper cathodes at the monthly average of the December Copper futures (HG) settlement price, during the month of November.

  • Cost of production all in:  $1.50 per pound
  • Current December HG Price:  $2.57 per pound

The producer sells 20 lots of December HG futures at $2.57 per pound to secure the profit of $1.07 per pound, creating a short position of 20 lots of December HG.

Beginning on November 1, as the pricing for the contract begins, the producer buys one lot of December HG TAS every day during the month of November to obtain the monthly settlement average. This daily buy-back reduces the short position until it reaches zero on the last trading day of November. 

If the average settlement price of December HG remains unchanged throughout the month of November, the profit of $1.07 remains intact. If the average settlement price of December HG rallies to $2.62 per pound, the futures hedge loses $.05 per pound, but the physical sale is $0.05 higher, which preserves the profit of $1.07 per pound. If the average price of December HG sells off to $2.55 per pound, the physical sale is $0.02 per pound lower, but the futures hedge nets $0.02 per pound, so the original profit of $1.07 is preserved.

For ease of explanation, this example does not reference factors such as bid-offer spread, brokerage and exchange fees or margin requirements.