marketsAround 3% of futures contracts for silver are actually delivered. The rest are exchanged for money instead of silver (speculators). What would happen if an unfeasible % of orders was ordered deliverable (say 10%) on a certain day? What would happen to the price of silver? Would the person who was unable to fulfill their end of the contract face any penalties?
If some silver futures contracts went unfulfilled, then the market may lose faith in them, and they’d crash in value.
And at the immediate local scale: they are contracts, so are subject to whatever the relevant recourse is for contract disputes: typically by bringing a civil case. There may well be legal recourse against the futures exchange too, which may share some of the legal responsibility for an unfulfilled contract.
Many futures contracts allow for cash settlement, which means that physical delivery may be completely irrelevant: all that would be needed would be the cash equivalent, based on the spot market price at contract expiry. For that reason, futures markets typically ask participants for margin: money that varies as a fraction of the total contract value, deposited at the Exchange when trading the contract.
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