Generally the term for financial futures contracts not traded on the stock exchange, not standardized, but agreed individually between contracting parties. As a rule, they contain a precisely defined delivery date; settlement takes place at the end of the contract by delivery or by cash settlement. However, the individually freely negotiated form of a forward contract hinders its tradability. This is because it is difficult to find a partner who is willing to accept a contract on the negotiated terms. In addition, the contracting parties must be aware in advance of the creditworthiness of the counterparty. – See derivatives, classification, futures, option, forward contract.
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