FRA vs Interest Rate Futures
Both fix a rate for a future period today. Whether the trade is made on an exchange or bilaterally changes how terms are set and how cash moves.
| Point of comparison | FRA | Interest rate futures |
|---|---|---|
| Venue | Bilaterally between the parties (an OTC derivative) | An exchange (an exchange-traded derivative) |
| How terms are quoted | A fixed rate (the contract rate) is agreed | Traded at a price expressed as 100 minus the rate |
| Size and tenor | The parties agree the notional amount and the period | The contract size and the quarterly reference periods are fixed by the exchange |
| Settlement of gains and losses | Paid once, when the rate is set at the start of the period: the interest difference due at the end of the period, discounted to that date | Gains and losses are marked to market daily, and the final settlement is in cash, based on the difference between the final settlement price and the agreed price |
| Counterparty credit risk | In a bilateral trade that is not cleared, there is a risk that the counterparty cannot pay the difference on the settlement date | A clearing house stands between the parties, and positions are settled through daily marking to market and margin |
The table follows the explanations and sources in the linked articles.
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Last reviewed: 2026-10-19