For which type of clients is delayed delivery typically used?

For which type of clients is delayed delivery typically used?

• A. Retail clients
• B. Institutional clients
• C. All individual investors
• D. Only high-net-worth individuals

Answer: (B)

Delayed delivery is typically associated with institutional clients due to the unique nature of their trading practices and the volume of transactions they engage in. Institutional clients, such as mutual funds, pension funds, and hedge funds, often operate with significant capital and benefit from the flexibility that delayed delivery offers. This practice allows them to manage large trades more effectively, mitigate market impact, and achieve better pricing by not having to execute trades immediately.

Retail clients, on the other hand, usually do not engage in delayed delivery as their trading needs are more straightforward and focused on immediate purchases or sales. Similarly, while all individual investors might occasionally deal with delayed delivery terms in specific situations, it is primarily institutional clients that regularly utilize this approach as part of their strategic investment and trading operations. High-net-worth individuals may have some complex transactions but still typically do not engage in the same scale of trading as institutions. Therefore, the correct context for delayed delivery is most applicable to institutional clients.