Agreement between a buyer and a seller to exchange certain goods for a fixed price some time in the future.
An over-the-counter obligation to buy or sell a financial instrument or to make a payment at some point in the future, the details of which were settled privately between the two counterparties. Forward contracts generally are arranged to have zero mark-to-market value at inception, although they may be off-market. Examples include forward foreign exchange contracts in which one party is obligated to buy foreign exchange from another party at a fixed rate for delivery on a pre-set date. Off-market forward contracts are used often in structured combinations, with the value on the forward contract offsetting the value of the other instrument(s).
A contract in which the seller agrees to deliver a specified commodity or financial instrument at a specified price sometime in the future. The terms of a forward contract are negotiated at the time of the trade. Forward contracts trade "over the counter", as opposed to trading on a market.
A contract between two counterparties where one person agrees to buy from another other person, who of course agrees to sell, a certain quantity of a financial instrument or commodity at a pre determined price but for delivery at an agreed future date.
Limited time agreements in which a seller promises to deliver a specified investment to a buyer sometime in the future for a price that is specified in the agreement. See also futures contracts.
Contracts specifying a given volume of a particular currency to be exchanged for a specific price on a specific settlement date.
A vehicle for buying or selling a stated amount of foreign exchange at a stated price per unit at a specified time in the future.
Futures and forward contracts are similar, except that a forward contract trades over-the-counter. Forwards generally are used to hedge risk. Forward exchange rate contracts, for example, provide for delivery of a specified currency amount at a fixed exchange rate at a future date. A forward rate agreement provides for delivery of a specified amount at a fixed interest charge at a future date.