What Is the Key Difference between a Futures Contract and a Forward Contract? ⎊ Path

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

Both are agreements to buy or sell an asset at a predetermined price on a future date. The key difference is that futures contracts are standardized, traded on centralized exchanges, and subject to daily mark-to-market and margin requirements.

Forward contracts, however, are customized, traded over-the-counter (OTC) between two parties, and carry higher counterparty risk due to the lack of a clearing house guarantee.

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