Forwards vs Futures
Both are agreements to buy or sell on a set future date at a price agreed today. They differ in where they are traded, which changes how terms are set and whether gains and losses are settled daily.
| Point of comparison | Forward | Futures |
|---|---|---|
| Venue | Agreed one-to-one, without going through an exchange | Traded by many investors through an exchange |
| How terms are set | The parties set the contract terms themselves | Follows standardized specifications (underlying, delivery timing, and so on) |
| Maturity and delivery timing | The parties agree the maturity date | The delivery timing is standardized; JGB futures use the quarterly months of March, June, September, and December |
| Settlement of gains and losses | The gain or loss is the difference between the price at maturity and the forward price, with no daily mark-to-market by an exchange | Gains and losses are settled daily at the closing price, and margin is required |
| Counterparty and exiting before maturity | The trade is with a single counterparty and cannot be closed on an exchange with an offsetting trade | Trading is with many counterparties, including unfamiliar ones. Daily mark-to-market and margin make settlement reliable, and a position can be closed with an offsetting trade by the last trading day |
The table follows the explanations and sources in the linked articles.
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Last reviewed: 2026-10-19