Future contracts are the standardized contract that trades in the future markets for specific delivery date. Forward contract are private deals that are signed between two members. The future contract act as a price discovery role in the forecast of exchange rate risk. It exchanges to the International Monetary Market for stability. The IMM also serves as the outlet for hedging future contract. The future contract required a standard quantity of available currency, it has to be at a fix exchange rate, and at a set delivery date only. The transaction costs of future contract are the commissions to the floor traders. In future contract, leverage is high, initial margin require is less than 2 % of the contract value. You are able to get out of the contract by selling the contract to someone. It provides very little exchange rate risk, and contracts are set to daily price limit to maintain the margin. Forward contract is a private agreement between the two traders to set a future delivery at a fixed exchange rate in a future date. Unlike forward contract, future contract is limit to only seven currencies. The size of the contract is rigid and has a limit on the delivery dates. Future and forward contract are different in the location the trade in, the regulation, frequency of delivery, size of the contract, transaction costs, quotas, margins, and credit risk. Future are more regulate, more frequent, size are rigid, transaction cost are the amount that are paid to the broker. A low 2% margin and low credit risk. Forward contract have more settle regulation, only 4 times of delivery, transaction cost are the forward discounts paid, and margins are high.  resource: powerpoint slides, textbook