Chapter 01 · Section 1.1

Fowards versus Futures Table

                          Forwards             Futures

Contract Terms             variable             standard
Delivery                   expected             only 2-5%
Trading                    via phone            centralised
Margins                    negotiated           uniform
Credit Risk                taken by             clearing
                           counterparty         house
Liquidity                  ........             ........
Cash Flow                  ........             ........

a) The forward market is likely to be more liquid than the futures market.
• b) The futures market is likely to be more liquid than the forward market.
  Yes. Usually the futures market is more liquid than a forward market. As a consequence, the probability of entering or exiting the market, without disrupting the price level, is greater than in the forward market. Continue

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