10 January 2014
Forward Vs. Future Contracts: Sl. # Feature Forward Future 1 Trading Forward contracts are traded on personal basis on telephone etc. Future contracts are traded in competitive environment 2 Size No standard size Standardised sizes 3 Organised Exchanges Traded in over the counter market Traded in organised exchanges at designated locations. 4 Settlement Takes place on the date agreed by parties Takes place daily through exchange clearing house. 5 Delivery date Delivery to be made as per agreed terms Delivery dates are fixed in cycles. 6 Transaction costs Based on bid and ask spreads Brokerage fee is there on both buy and sell orders 7 Mark to Market No such procedure Mark to market is done on daily basis 8 Margins No margins are required Margins are required. 9 Credit risk Credit risk is born by each party No credit risk.
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