What is "forward market"

n. a commodity exchange where futures contracts are traded [syn: futures exchange, futures market]

The forward market is the informal over-the-counter financial market by which contracts for future delivery are entered into. Standardized forward contracts are called futures contracts and traded on a futures exchange.

It should not be confused with the futures market, as

• Future contracts are traded in exchanges whereas a forward contract is traded over the counter.
• The forward market is highly customized.
• Each party has to deal with counterparty risk, unlike exchange-traded futures where the contracts are renovated.