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Ex-Pit Transaction

Last updated 23rd Sep 2022


The term ex-pit transaction refers to a commodity transaction that takes place away from the floor of the exchange where it would normally occur. Ex-pit transactions typically involve the cash market and a private deal between two hedgers.


An ex-pit transaction involves the trading of a commodity contract away from the floor where it is normally traded. For example, the closing out of a futures position off the exchange floor. These deals are effective when two traders wish to close out their positions and they hold equal and opposite futures contracts as a hedge.

As part of this process, the hedgers would contact the exchange and request their contracts be canceled without making a trade. By doing so, their contracts cannot be called upon to deliver the commodity. Communicating with the exchange also ensures open interest in their contracts reflect the closing out of their positions.

Related Terms

execution, exercise, price improvement, payment for order flow, duty of best execution, assigned

Moneyzine Editor

Moneyzine Editor