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What is a (Financial) Futures Contract?

Financial futures are fixed contractual agreements to deliver, or accept delivery of a standardized quantity of an underlying instrument (financial instrument) at a pre-defined price and at pre-defined point in time.

Standardized means that the exchange (Eurex) stipulates the contractual components of the forward transaction. All that market participants need to negotiate is the price.
Underlying instruments of financial futures contracts may be bonds, equities, indices or reference interest rates, for instance.
Futures are unconditional forward transactions. The buyer commits himself to accepting delivery of, and paying for the underlying instrument when the futures contract matures. The seller, on the other hand, enters into a firm commitment to deliver the underlying instrument.



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