Futures Market

Business, Legal & Accounting Glossary

Definition: Futures Market




Full Definition of Futures Market


The futures market can be referred to as a type of auction market where the participating parties can trade commodities or futures contracts. A futures contract refers to a contract to purchase definite quantities of a commodity or financial instrument at a specified rate and the delivery date is fixed at a specified time in future. The density of the Futures market increases when there is uncertainty in the stock market.

Bond Futures

Bond future can be referred to as a contractual compulsion, in which a contract holder can trade bonds on a precise date at a predetermined price. A major place to trade bond future is the exchange market, where the prices and dates are dogged at the time of the purchase of future bonds. Bond contracts are usually standardized and are supervised by an authoritative organization that guarantees a certain level of fairness and uniformity. This form of offshoot activity can be uncertain since it engages dealings posted at a future date with only limited existing information. There is an unlimited risk for both the buyer and seller as the price of the fundamental bond is subjected to drastic fluctuations between the implementation date and the preliminary agreement.

Futures Contracts

A futures contract can be referred to as a standardized contract, where one can trade any type of financial instrument at a specified price after a specified period of time. The future date of any futures contract is termed as the delivery date or final settlement date. The price, which is determined beforehand, is known as futures price. Any type of futures contract provides the holder with an obligation to trade. In simple terms, the owner of a futures contract can freely trade commodities for a future time period.

Futures Exchange

A futures exchange is known as a central financial exchange where the participants can trade freely standardized futures contracts. The period of Ancient Greek or Phoenician traces the origins of futures trading. However, according to history, the foremost modern organized futures exchange was initialized in 1710 at the Dojima Rice Exchange in Osaka in Japan.

Some of the major futures exchanges include:

  • Chicago Board Options Exchange (CBOE)
  • Intercontinental Exchange
  • Chicago Mercantile Exchange (CME)
  • Montreal Exchange
  • European Climate Exchange
  • Belgian Futures & Options Exchange (BELFOX)
  • Risk Management Exchange (RMX)

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Definition Sources


Definitions for Futures Market are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 27th March, 2020 | 3 Views.