Currency Futures versus Spot Forex ; The main difference between a futures transaction and a spot transaction consists of the delivery date of the currencies. In the spot market, delivery is within two business days, and all transactions with value dates beyond spot’s two day settlement are known as forward contracts.
A currency futures contract, on the other hand, consists of a standardized agreement between two parties to take delivery of a certain amount one currency and deliver another currency at a pre-determined future date and at a rate determined in the marketplace.
In other words, a currency futures contract is a forex forward contract with a set delivery date and standardized contract size that trades on a centralized exchange or its electronic network.
Because of its delivery taking place at a certain date in the future, the futures price would also have to reflect differences in interest rates and carry charges on both currencies involved in the transaction.
A currency futures contract, on the other hand, consists of a standardized agreement between two parties to take delivery of a certain amount one currency and deliver another currency at a pre-determined future date and at a rate determined in the marketplace.
In other words, a currency futures contract is a forex forward contract with a set delivery date and standardized contract size that trades on a centralized exchange or its electronic network.
Because of its delivery taking place at a certain date in the future, the futures price would also have to reflect differences in interest rates and carry charges on both currencies involved in the transaction.
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