Forward transaction

A contractual transaction to buy or sell an item, in which the payment and delivery take place at a predetermined future date

With a futures contract, the trade, i.e., the delivery of payment for goods, is finalised at a predetermined time in the future. (In comparison, in a spot (or cash) transaction, payment and delivery take place close to the time of the contract’s close.)

This type of trade is possible with all types of goods, e.g. with securities, interest, currencies, metals and agricultural products. Commodity futures (physical goods such as wheat, metals) and financial futures (e.g. share options) are differentiated on the markets.

The most important characteristic of derivative transactions comes from the fact that the deal is a “floating transaction”, in balance-sheet terms, until the actual date of the deal, because neither buyer nor seller must uphold their end of the deal until the maturity date.

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