A contract forward or forward agreement is a product Dérivé.

It is a question of an agreement of buying or of selling a credit at a price and a future date specified in the contract. In fact, the definition of the forward is identical to that of the future contracts with the difference close the latter are negotiated on a market Private, between Banque S and financial institutions whereas the future contracts of are negotiated on an organized market, located at a quite precise place.

Moreover future contracts of are contracts standardized in term of amounts and expiration dates, the contracts of forwards are contracts not in the long term standardized. Very often, at the time of the outcome, the two counterparts proceed to the payment of the difference between the price negotiated in advance and the market price (procedure known as of cash settlement ). Very few contracts are the subject of a delivery.

The " on mesure" what offers the forwards involves a risk of Liquidité. It is indeed very difficult to untie its position before the expiry because of the absence of counterpart. In addition the risk of Défaut is much more present than for the future . Indeed, it is only at the limit that one notes the failure or not counterpart contrary to the markets the future ones which from day to day note the defect because of the existence of a clearing house.

See too

Internal bonds

• Private
• Derivative product
• financial Instrument
• Forward Misses Agreement
• Change in the long term