What is the difference between futures and forward contracts?

The main differentiating feature between futures and forward contracts — that futures are publicly traded on an exchange while forwards are privately traded — results in several operational differences between them.

How does a futures contract get its name?

A futures contract gets its name from the fact that the buyer and seller of the contract are agreeing to a price today for some asset or security that is to be delivered in the future. Are Futures and Forwards the Same Thing?

Is there a secondary market for forward contracts?

As the profit or loss on a forward contract is only realized at the time of settlement, there is a greater risk of default. The highly standardized nature of futures contracts makes it possible for them to be traded in a secondary market. In contrast, there is essentially no secondary market for forward contracts.

Why are details of futures contracts made public?

Details of futures contracts are made public because they are traded on exchanges, unlike forwards, which are negotiated privately between counterparties. Because futures are regulated, they come with less counterparty risk than forward contracts.