How Do Futures Contracts Differ from Forward Contracts in Financial Derivatives? ▴ Learn

How Do Futures Contracts Differ from Forward Contracts in Financial Derivatives?

Futures and forward contracts are both agreements to buy or sell an asset at a predetermined price on a future date. The main difference is standardization and exchange-trading.

Futures are standardized, traded on a regulated exchange, and require daily marking-to-market and margin. Forwards are customized, traded over-the-counter (OTC), and do not have a formal clearing process, leading to higher counterparty risk.

What Is the Primary Difference between a Forward and a Futures Contract?

What Is the Primary Difference between a ‘Futures Contract’ and a ‘Forward Contract’?

What Is a Forward Contract and How Does It Differ from a Futures Contract?

Define a Forward Contract and How It Differs from a Futures Contract