# How Do Futures Contracts Differ from Forward Contracts in Financial Derivatives? ⎊ Path

**Published:** 2025-12-05
**Author:** Greeks.live
**Categories:** Path

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## 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.

- [How Do Futures Contracts Differ from Forward Contracts?](https://learn.greeks.live/path/how-do-futures-contracts-differ-from-forward-contracts/)

- [What Is the Difference between a Futures Contract and a Forward Contract?](https://learn.greeks.live/path/what-is-the-difference-between-a-futures-contract-and-a-forward-contract/)

- [What Is a Forward Contract and How Does It Differ from a Futures Contract?](https://learn.greeks.live/path/what-is-a-forward-contract-and-how-does-it-differ-from-a-futures-contract/)

- [What Is the Key Difference between a Futures Contract and a Forward Contract?](https://learn.greeks.live/path/what-is-the-key-difference-between-a-futures-contract-and-a-forward-contract/)

- [Contrast Standardization with the Customization Found in Forward Contracts](https://learn.greeks.live/path/contrast-standardization-with-the-customization-found-in-forward-contracts/)

- [Differentiate between a Forward Contract and a Futures Contract](https://learn.greeks.live/path/differentiate-between-a-forward-contract-and-a-futures-contract/)

- [How Does the Institutional Use of Over-the-Counter (OTC) Options Differ from Exchange-Traded Options?](https://learn.greeks.live/path/how-does-the-institutional-use-of-over-the-counter-otc-options-differ-from-exchange-traded-options/)

- [How Does the Legal Documentation Differ between Standardized and Customized Derivatives?](https://learn.greeks.live/path/how-does-the-legal-documentation-differ-between-standardized-and-customized-derivatives/)

## Discover More

### [Why Might a Business Prefer a Forward Contract over a Futures Contract?](https://learn.greeks.live/path/why-might-a-business-prefer-a-forward-contract-over-a-futures-contract/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Why Might a Business Prefer a Forward Contract over a Futures Contract?](https://learn.greeks.live/wp-content/uploads/2025/10/Simulated-Volatility-Surface-Representation-With-Fragmented-Liquidity-Pool-Assets-And-A-Fixed-Staking-Mechanism.webp)

Businesses prefer forwards for their customizability, allowing them to create a perfect hedge for a specific, non-standard risk.

### [How Do Futures Contracts Differ from Forward Contracts?](https://learn.greeks.live/path/how-do-futures-contracts-differ-from-forward-contracts/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Do Futures Contracts Differ from Forward Contracts?](https://learn.greeks.live/wp-content/uploads/2025/10/Analyzing-Digital-Asset-Volatility-Through-Stochastic-Process-Modeling-of-Option-Greeks-Visualization.webp)

Futures are standardized and exchange-traded; forwards are customized, private, and OTC.

### [What Role Do Oracles Play in Executing Financial Derivatives Managed by Smart Contracts?](https://learn.greeks.live/path/what-role-do-oracles-play-in-executing-financial-derivatives-managed-by-smart-contracts/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Role Do Oracles Play in Executing Financial Derivatives Managed by Smart Contracts?](https://learn.greeks.live/wp-content/uploads/2025/10/Macro-View-of-Digital-Asset-Custody-Mechanism-Coupling-with-Off-Exchange-Tokenized-Security-Settlement.webp)

Oracles feed real-world data to smart contracts to trigger the execution of financial derivatives.

### [How Do Financial Derivatives Contracts On-Chain Differ in Their Reentrancy Risk Profile?](https://learn.greeks.live/path/how-do-financial-derivatives-contracts-on-chain-differ-in-their-reentrancy-risk-profile/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Do Financial Derivatives Contracts On-Chain Differ in Their Reentrancy Risk Profile?](https://learn.greeks.live/wp-content/uploads/2025/10/Aerodynamic-Profile-of-a-High-Frequency-Algorithmic-Trading-System-Nanoprobe-Apex.webp)

Complex interactions in settlement and collateral management on derivatives platforms increase the reentrancy attack surface.

### [What Is the Main Advantage of a Forward Contract over a Futures Contract?](https://learn.greeks.live/path/what-is-the-main-advantage-of-a-forward-contract-over-a-futures-contract/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is the Main Advantage of a Forward Contract over a Futures Contract?](https://learn.greeks.live/wp-content/uploads/2025/10/Abstract-Geometric-Depiction-of-Asymmetric-Volatility-Surface-Hedging-Strategies-in-Decentralized-Finance.webp)

Customization; they can be precisely tailored to meet a corporation's specific quantity, quality, and delivery needs.

### [How Is a Net Loss under the 60/40 Rule Carried Forward?](https://learn.greeks.live/path/how-is-a-net-loss-under-the-60-40-rule-carried-forward/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Is a Net Loss under the 60/40 Rule Carried Forward?](https://learn.greeks.live/wp-content/uploads/2025/10/Interlocking-Glossy-Polychromatic-Surfaces-Modeling-Volatility-Surface-Skewness-in-Digital-Asset-Hedging.webp)

A net 60/40 loss is first carried back three years to offset Section 1256 gains, then carried forward indefinitely maintaining its 60/40 character.

### [What Are the Disadvantages of Futures Contracts Compared to Forward Contracts?](https://learn.greeks.live/path/what-are-the-disadvantages-of-futures-contracts-compared-to-forward-contracts/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Are the Disadvantages of Futures Contracts Compared to Forward Contracts?](https://learn.greeks.live/wp-content/uploads/2025/10/Asymmetric-Interlocking-Struts-Approaching-Liquidity-Pool-Horizon-In-Digital-Asset-Contracts.webp)

Futures contracts are not customizable, which can create basis risk for hedgers.

### [How Does an NDF Differ from a Standard Forward Contract?](https://learn.greeks.live/path/how-does-an-ndf-differ-from-a-standard-forward-contract/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Does an NDF Differ from a Standard Forward Contract?](https://learn.greeks.live/wp-content/uploads/2025/10/Spherical-Volatility-Surface-Abstraction-Contrasting-Beige-and-Dark-Hues-Signaling-Option-Premium-Dynamics.webp)

Standard forwards require physical delivery; NDFs are cash-settled because the underlying asset is non-deliverable.

### [Why Is the Mark-to-Market Process Less Common for Forward Contracts Compared to Futures Contracts?](https://learn.greeks.live/path/why-is-the-mark-to-market-process-less-common-for-forward-contracts-compared-to-futures-contracts/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Why Is the Mark-to-Market Process Less Common for Forward Contracts Compared to Futures Contracts?](https://learn.greeks.live/wp-content/uploads/2025/10/Macro-Perspective-on-Precision-Actuator-Mechanics-Analogous-to-Algorithmic-Option-Price-Discovery-Mechanisms.webp)

Forwards are private OTC contracts settled at expiration, while futures are exchange-traded and marked-to-market daily to mitigate risk.

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