Spot /cash market is the place where actual shares buy /sell takes place.
people who don’t want to buy actual shares of company but want only rights of buy /sell go for Future or option contracts.
The exchanges collect some margin amount from buyers/sellers in order to reduce the risk of Buyers and sellers since the exchange it the one responsible for any unsettled transaction.
There are future and option contracts. Future buyer and seller gets rights to buy /sell contracts with obligations. but option buyer gets right to sell with out obligation for which he pays some Premium to Sellers.This premium amount decided by Both buyers and sellers based on companies future performance.
Unlike physical settlement, in cash settlement, no physical transaction takes place. only difference of money transfers which reduce both buyer ,seller burdens.
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