Key points
- The execution price of a TAS order is not known when the order is placed; it is only finalised once the exchange publishes the day’s settlement price.
- Whether TAS is offered, which contracts it covers and how large a tick offset is allowed are set by each exchange’s rules.
- In physical trade, pricing at a given day’s settlement price is one form of price fixing, and TAS is the matching futures hedging tool.
In practice
In commodity trade, the parties sometimes agree to use the futures settlement price on a particular trading day as the contract benchmark, rather than letting one party choose a moment during the session to fix the price. This makes pricing transparent and reduces disputes. However, if the trader hedges with ordinary orders during the session, the average futures execution price will differ from the settlement price, producing extra gains or losses.
TAS solves exactly this problem. The trader submits a TAS order during the session and its futures execution price is also anchored to that day’s settlement price, so physical and futures share the same pricing benchmark. Users need to observe each exchange’s rules on eligible contracts, trading hours and tick offsets, and the system must distinguish the price confirmation process for TAS fills from that for ordinary fills.
How Tranexio supports it
Tranexio manages TAS and settlement-price pricing as pricing modes in the pricing order, confirms prices from the settlement price for the relevant reference market and trading day, and links them to hedge recommendations and futures orders. See Price fixing and price management and Futures trading.