What are the differences between futures and forward markets? What are the pros and cons associated

QUESTION

What are the differences between futures and forward markets? What are the pros and cons associated with using each one?
Difference between futures and forward markets: a. Futures contracts are standardized. Forward
contracts are customized. b. Parties in a futures contract hold formal
contracts with the futures exchange. Parties to a forward contract hold formal
contracts with each other. c. Forward contracts
are typically satisfied by actual delivery of the commodity. Futures contracts
can be satisfied by making an offsetting transaction (purchase or sale) in the
futures exchange. d. Futures contracts have less default
risk because they are marked
to market daily.
Forward contracts are marked to market only at maturity. e. Futures contracts
have less default risk because parties to the contracts must post margin

to guarantee performance on the contract. There is no margin on a forward
contract. Pros and cons associated with using each other: The
forward market is useful when a set amount of currency is needed on a specific
date. The futures market is useful when
it is necessary to hedge price risk over a period of time. Futures
contracts trade only in standardized amounts. However, in contrast with forward contracts, it is easy to liquidate a
futures contract before delivery.

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