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How Does Standardization Affect the Liquidity of Exchange-Traded Futures?

Standardization, meaning fixed contract size, expiration dates, and quality of the underlying asset, increases liquidity. It ensures that many market participants are trading the exact same instrument, making it easier to find a counterparty.

This deep pool of buyers and sellers leads to tighter bid-ask spreads and lower transaction costs. Standardized contracts are more fungible.

How Do Centralized Exchanges (CEX) and Decentralized Exchanges (DEX) Typically Compare in Terms of Bid-Offer Spreads?
What Is the Concept of “Liquidity Depth” and Why Is It Important for Collateral Assets?
Why Is the Bid-Ask Spread on a Futures Contract Often Tighter than on the Spot Market?
How Does Market Depth Affect the Effectiveness of Arbitrage?