A Glimpse on Futures Contracts and Forwards Contracts

Basically, they are both:

• Either Deliverable or Cash Settlement Basis.


• Priced to have Zero value at the time of contract initiation.

And they differs by:

• Futures are trade on exchanges. Forwards are private contracts and not traded.


• Futures are standardized. Forwards are customized to individual needs.


• A single clearinghouse is the counterparty for all futures contracts. Forwards are contracts with originating counterparty.


• Futures are regulated by the government. Forwards are usually not.

The above are just summary of the characteristics. To understand more, definitely some readings are needed.