Futures contract

An exchange-traded standardised forward, marked to market daily with margin. The clearing house stands between the two sides.

Where you will meet it

Futures contract comes up in 46 learning outcome notes across the FRM syllabus. A few of them:

• Fund Management
  FRM Part I · Financial markets and products

  “Managed futures funds trade futures, often trend following.”

• How Do Firms Manage Financial Risk?
  FRM Part I · Foundations of risk management

  “Funding liquidity risk arises because futures are settled daily in cash while the gain on the hedged exposure may be unrealised.”

• Calculating and Applying VaR
  FRM Part I · Valuation and risk models

  “Cash equities, currency positions, futures and forwards are linear.”

• Derivatives
  FRM Part II · Credit risk measurement and management

  “Swaps, forwards, futures, options and credit default swaps are the main forms.”

See also

Clearing house

All terms beginning with F · FRM glossary

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