(1) The purpose of the transaction is different: forex futures trading has two purposes, one is to avoid foreign exchange risks, such as hedging; The other category is speculation in foreign exchange for profiteering, such as speculators. The purpose of engaging in forward foreign exchange transactions is mainly to avoid foreign exchange risks.
(2) Traders and their relationships are different: Participants in forex futures trading can be banks, other financial institutions, companies, governments and individuals. As long as the margin is paid according to regulations, they can all go through economic banks with membership in futures exchanges or enterprises with good relations and good credit with banks. As the exchange has a clearing house, participants engaged in forex futures trading need not consider the credit dealers of their counterparties, banks engaged in foreign exchange business, or enterprises with good relations and good credit with banks. Because futures trading lacks intermediaries such as clearing houses, participants must consider each other's credit status. From the perspective of settlement, the risk of forward foreign exchange transactions is higher than that of forex futures trading.
(3) Different trading instruments: futures contracts are traded in the forward foreign exchange market, while forward contracts are traded in the forward foreign exchange market. The former is a standardized contract, and the transaction amount is expressed by the number of contracts. The minimum transaction amount is one contract, and the maximum transaction amount can be multiple contracts. The amount of each contract has different provisions in different currencies. The foreign exchange forward contract has no fixed specifications, and the details of the contract are decided by both parties.
Different trading institutions: forex futures trading mainly trades on the futures exchange through open bidding. Basically, tangible transactions are intangible markets between banks, between banks and brokers, and between banks and customers through telecommunications, that is, the so-called OTC market.
(5) The trading rules are different: forex futures trading adopts the margin system, and every day's transactions are cleared through the clearing house. Surplus can be used to withdraw excess cash, while deficit needs to pay margin. Forward foreign exchange transactions do not require margin, and both parties to the transaction only make settlement when they are due for delivery.
(VI) Different trading results: the forward foreign exchange market can be used for hedging or speculation, and futures trading itself also provides such conditions. There are two delivery methods for currency futures trading: (1) delivery to maturity. In practice, few contracts are actually delivered due, accounting for only 1% ~ 2%. (2) At any time, it is called "settlement" to make a futures transaction with the same contract quantity and the opposite direction in the delivery month, which is true for most futures transactions. If you buy several foreign currency futures contracts and then sell the same number of contracts, you can not only close your position, but also completely settle the contracts you have already made, that is, you don't have to pay or collect money when the contracts expire. Generally speaking, forward foreign exchange transactions will be delivered on the specified delivery date. In addition, the delivery of currency futures is unified through clearing houses, while forward foreign exchange transactions are direct clearing and delivery between customers and banks.
(VII) Different delivery dates: foreign currency futures contracts stipulate that the contract expiration date is Wednesday of the third week of the delivery month (the delivery months of different varieties are completely different, and the delivery months of foreign currency futures are generally March, June, September and 65438+February each year). There is no fixed delivery date for forward foreign exchange transactions, and customers can choose freely according to their needs. In addition, for the transfer of contracts, foreign exchange futures contracts are transferable, while forward foreign exchange contracts are non-transferable and have weak liquidity. In short, the difference between forex futures trading and forward foreign exchange trading points is obvious. They are two different types of trading forms, but there are also similarities. For example, the originality of the two trading forms is basically the same, and the functions of the two forms are the same in many aspects.