Off-exchange derivatives transaction, the details of which are negotiated individually by the contracting parties.

Because forwards are not standardised instruments, the type and price of the goods to be traded, the volume, and the contract maturity must be determined individually. Owing to the number of variables that must be considered when transacting a forward, the fungibility of these derivatives is limited. Forwards differ from futures in that the underlying instrument is nearly always delivered. Margin requirements must be agreed upon individually, because it is the parties to the contract – and not the clearinghouse – who bear the risk.

In Germany, forwards are executed primarily for currencies and interest rates, and rarely for stocks, bonds, derivatives or notional underlying instruments. Typical forward contracts are currency forwards and the forward rate agreement (FRA).

Our glossary explains important financial terms and should not leave any questions unanswered. However, if you are missing a definition, please write to us at We will then include the term if possible.