Canadian Securities Course (CSC) Level 1 Practice Exam 2026 – All-In-One Guide to Master Your Exam Prep!

Exchange-traded derivatives are more likely to deliver the underlying assets because they are standardized contracts that are traded on regulated exchanges. These exchanges have specific rules and requirements that govern the clearing and settlement process, which typically includes the actual delivery of the underlying asset upon expiration of the derivative contract.

In contrast, over-the-counter (OTC) derivatives are often customized agreements between two parties and can include various terms regarding settlement that may involve cash settlements instead of physical delivery of the underlying asset. This flexibility can make OTC derivatives less likely to result in actual delivery of the underlying security or commodity.

Additionally, exchange-traded derivatives generally have more liquidity and transparency due to being traded on public exchanges, which helps facilitate the physical delivery process as it is a part of the exchange's operational structure.