Markets
Friday, 7/24, 10:26 AM
Forwards vs futures: two ways to lock in a price, one big difference
- A forward and a future do the same basic job: fix today the price of something you will buy or sell later.
- But one is a private, tailor-made deal between two parties, and the other is a standardized contract traded on an exchange and backed by a clearinghouse.
- That difference decides who carries the risk if the other side fails.