Features of Futures Contract

    The features of a futures contract may be specified as follows:

    1. Trading on Organised Exchange: These are traded on an organized exchange like IMM, LIFFE, NSE, BSE, CBOT, etc.

    2. Standardised Contract: These involve standardized contract terms, viz., the underlying asset, the time of maturity, the manner of maturity, etc.

    3. Association with Clearing House: These are associated with a clearing house to ensure the smooth functioning of the market. Future exchanges have clearinghouse arrangements to guarantee the fulfillment of contract obligations.

    4. Margin Requirements and Daily Settlement: There are margin requirements and daily settlements to act as further safeguards. Future positions can be closed easily.

    5. Involvement of Regulatory Authority: These provide for the supervision and monitoring of contracts by a regulatory authority.

    6. Cash Settlement: Almost ninety percent of future contracts are settled via cash settlement instead of actual delivery of the underlying assets.

    Disclaimer: While we make every effort to update the information, products, and services on our website and related platforms/websites, inadvertent inaccuracies, typographical errors, or delays in updating the information may occur. The material provided on this site and associated web pages is for reference and general information purposes only. In case of any inconsistencies between the information provided on this site and the respective product/service document, the details mentioned in the product/service document shall prevail. Subscribers and users are advised to seek professional advice before acting on the information contained herein. It is recommended that users make an informed decision regarding any product or service after reviewing the relevant product/service document and applicable terms and conditions. If any inconsistencies are observed, please reach out to us.

    Latest Articles

    Related Stories

    Leave A Reply

    Please enter your comment!
    Please enter your name here

    Join our newsletter and stay updated!