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Forward

• Is a market similar to futures in terms of deferred deliveries. However, notable differences include the lack of contract standardization, the lack of a central clearinghouse, the potential for substantial counterparty risk, but it allows contractual term customization and deliveries at times, points and grades other than those listed for futures contracts. It is alsoused to refer to the bank currency market.

 
 Embedded terms in definition
 Clearinghouse
Contract
Counterparty risk
Counterparty
Currency
Futures contracts
Futures contract
Futures
Grades
Listed
Market
Risk
 
 Referenced Terms
 1099 b: Is a form that reports redemptions and exchanges to the Internal Revenue Service (IRS) from accounts other than money market and retirement. It also reports gross proceeds from sales of stocks, bonds, commodities, futures, and Forward contracts.

 Backwardation: A market condition in which futures prices are lower in the distant delivery months than in the nearest delivery month. This situation may occur in when the costs of storing the product until eventual delivery are effectively subtracted from the price today. The opposite of co tango.Is the market condition whereby the deferred or more Forward delivery months are at a progressive discount to the spot or nearby month. This is also known as an inverted market. This is opposite to a contango or carrying charge market.

 Bank market: Is the spot and Forward markets for currencies. Here, there are known counterparties to the transactions.

 Bundles: Are variations of strip trades whereby a trader or risk manager can place a series of calendar month contracts in one transaction. Packs can be bought or sold. They are quoted in quarter basis points from the previous settlement price. These transactions expedite credit market positions and swap hedges and adjustments. One can also trade bundles on a Forward basis comparable to other money and credit market instruments.

 Cash transaction: A transaction where exchange is immediate, as contrasted to a Forward contract, which calls for future delivery of an asset at an agreed-upon price.

 
 Related Terms
 

<< Formula basis Forward contract >>

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