Location is one of the key dimensional attributes of all physically settled, and many financially settled, trades
Location is usually a description of where the delivery a of a trade will take place
Although this sounds fairly straightforward, in practice location means different things for different commodities.
This is because the delivery location simply defines the lowest level of distinguishable information about the delivery, and this lowest level varies with the commodity
So let's look at some commodity locations to see what this means:
The location of the majority of gas trades in the UK is the NBP
The NBP isn't even a real location, it describes the UK-wide gas pipeline network called the National Balancing Point
On the day of delivery, a seller of gas has an obligation to deliver gas at the NBP
The seller may deliver it from any other location that is physically connected to the NBP, it doesn't matter where that is.
The buyer may take delivery to any other location that is physically connected to the NBP
Gas traded locations such as the NBP are called hubs.
Some hubs require the buyer and seller to identify the physical connection point of delivery - these are physical hubs
Other hubs, like the NBP do not require the buyer and seller to identify the connection point - these are virtual hubs
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