Defference between forward and futures

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yog jaiswal

yog jaiswal (Querist)
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27 August 2014 can anyone explain me the difference between these two!!

CA Shashank Jain

CA Shashank Jain (Expert)
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27 August 2014 Futures contracts are exchange-traded and, therefore, are standardized contracts. Forward contracts, on the other hand, are private agreements between two parties and are not as rigid in their stated terms and conditions. Because forward contracts are private agreements, there is always a chance that a party may default on its side of the agreement. Futures contracts have clearing houses that guarantee the transactions, which drastically lowers the probability of default to almost never.

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