Futures contract

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Futures contracts are contracts stipulating the purchase or sale of commodities, currencies or securities of a specified quantity, at a specific price and on a predetermined date in the future.

Futures contracts tend to be standardised in terms of quantity, price and maturity periods.

They are written against an exchange clearing house and traded through the clearing house.

They also require a refundable up-front security payment (initial margin) and subsequent variation margin adjustments.

Because of their standardisation, futures contracts have a deep secondary market.

Their uses include hedging and speculation.

Often abbreviated to futures.

See also