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

A futures contract is a standardized agreement to buy or sell an asset at a predetermined price on a specific date, traded on a centralized exchange. They are highly regulated and settled daily.

A forward contract is a customized, over-the-counter (OTC) agreement between two parties to buy or sell an asset at a specific price on a future date. Forwards are less regulated, more flexible, and carry counterparty risk, as they are not guaranteed by a clearing house.