| Basis of Difference | Futures | Forwards |
| 1. Trading | Trading in a competitive arena (recognized exchange). | Traded by telephones or telex (OTC) |
| 2. Size of Contracts | Standardized in each futures market. | Decided between buyer and seller. |
| 3. Price of Contract | Changes every day. | Remains fixed till maturity. |
| 4. Mark to Market | Marked to market every day. | Not done. |
| 5. Margin | Margins are to be paid by both buyers and sellers. | No margin required. |
| 6. Counter Party Risk | Not present. | Present. |
| 7. Number of Contracts in a year | The number of contracts in a year is fixed. | There can be any number of contracts. |
| 8. Frequency of Delivery | Very few futures contracts are settled by actual delivery. | 90% of all forward contracts are settled by actual delivery. |
| 9. Hedging | Hedging is by nearest month and quantity contracts. So, it is not perfect. | There are tailor-made for specific dates and quantities. So, it is perfect. |
| 10. Liquidity | Highly liquid. | No liquidity. |
| 11. Nature of Market | Exchange-traded. | Over the Counter. |
| 12. Mode of Delivery | Standardized. Most of the contracts are cash-settled. | Specifically decided. Most of the contracts result in delivery. |
| 13. Transaction Costs | Include brokerage fees for buy and sell orders. | Costs are based on the bid-ask spread. |
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