Forward transactions follow the principle of "freedom of contract", and the relevant conditions in the contract, such as the quality, quantity, delivery place and delivery month of the subject matter, are determined according to the needs of both parties. Forward trading has no fixed place, and both parties are looking for suitable objects, so it is an unorganized and inefficient decentralized market. Therefore, the use of derivative contracts such as forward futures swaps and options will be brought to financial institutions because of different standardization levels and different trading places.

A financial institution refers to an institution engaged in financial business under the supervision and management of the financial management department of the State Council. The industries covered are banking, securities and insurance.