Forward market
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The forward market is the over-the-counter financial market in contracts for future delivery, so called forward contracts. Forward contracts are personalized between parties (i.e., delivery time and amount are determined between seller and customer). The forward market is a general term used to describe the informal market by which these contracts are entered into. Standardized forward contracts are called futures contracts and traded on a futures exchange.
It should not be confused with the futures market.
Difference Between Forward and Future
- Future Contract is traded in Exchanges whereas forward Contract is traded over the counter.
- Forward market is highly customized.
- Though the forward market is not exchange traded, chances of parties defaulting are very low.
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