Forwards versus Futures on your Series 65 or Series 66 Exam
• Ask the Series 7 Guru Every Tuesday Night ... Testable Points: 1. Forward and futures contracts involve two parties agreeing to buy and sell an asset at a specified price by a specific date. 2. A forward contract is a private, customizable agreement that settles at the end of the agreement and is traded over the counter. 3. A futures contract has standardized terms and is traded on an exchange, where prices are settled daily until the end of the contract. 4. Forward contracts are privately negotiated so there is little oversight, while futures are regulated by the Commodity Futures Trading Commission. 5. Forwards have more counterparty risk than futures.
