Futures contracts are standardized agreements to buy or sell an asset at a predetermined price on a future date.
They are unique because they can be traded on regulated exchanges, such as the Chicago Mercantile Exchange (CME), or over-the-counter (OTC), where counterparties negotiate terms directly.
This dual trading mechanism ensures flexibility and accessibility for market participants, differentiating futures from other derivatives like forwards, which are typically OTC-only.
Study Document References:
* Volume 1, Chapter 10:Derivatives and Features of Futures, including how they are traded.