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What Is the Difference between a “Future” and a “Forward” Contract?

Futures are standardized, exchange-traded, and cleared; forwards are customized, OTC, and carry counterparty risk.
Greeks.Live21.11.25

What Is the Difference between a “Future” and a “Forward” Contract?

Both are agreements to buy or sell an asset at a predetermined price on a future date. A futures contract is standardized, traded on an exchange, marked-to-market daily, and guaranteed by a clearing house, reducing counterparty risk.

A forward contract is customized, traded over-the-counter (OTC), and subject to counterparty risk. Futures are highly liquid; forwards are tailored to specific needs.

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