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Forward vs Futures

Pradip Srinivasan (CA Final) (869 Points)

03 June 2009

Can anyone explain the difference between futures and forwards, i am unable to understand

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Bhavadharani (Final student) (168 Points)
Replied 03 June 2009

Forward contracts are entered into by two parties in order to mitigate the rsik. its an Over-the-counter (OTC) derivative, in the sense it is not traded in the market. since there are no guarantee in case of forward defualt risk is high.

Whereas, futures are the contracts of defined size and are exchange traded derivatives. The performance of futures are guaranteed by clearing house in India it is CCL (Clearing Corporation Limited).

Hope this will satisfy you...