futures exchange or futures market is a central financial exchange where people can trade standardized futures contracts; that is, a contract to buy specific quantities of a commodity or financial instrument at a specified price with delivery set at a specified time in the future. These types of contracts fall into the category of derivatives. The opposite of the futures market is the spots market, where trades will occur immediately (2 business days) after a transaction agreement has been made, rather than at a predetermined time in the future. Futures instruments are priced according to the movement of the underlying asset (stock, physical commodity, index, etc.). The aforementioned category is named “derivatives” because the value of these instruments are derived from another asset class.[1]

Read more @ Wikipedia: https://en.wikipedia.org/wiki/Futures_exchange

Related posts