Forwards
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What are Forwards |
Forwards are similar to futures except that, instead of being traded on an exchange, they are over-the-counter or bilateral agreements between two parties to buy and sell a designated security at a specified time in the future at a price that has been determined, or whose method of determination has been agreed upon, at the time the contract is entered into.
Forwards are usually contracted for a specific amount or number of shares, not a number of standardized contracts as are futures.
Most forward contracts represent a certain number of underlying securities called the "trading unit" or "contract multiplier" which can be found in the contract specifications.
Often, one forward contract represents 10 or 100 shares. Therefore, the number of contracts and the multiplier will both be reported as "one" and the 10 or 100 shares will be reported as the underlying securities.
Forwards may be settled in cash or by delivery of the underlying shares.
For the purposes of insider reporting, transactions in futures and forwards may be reportable depending on the jurisdiction. You should seek advice from legal counsel who practices securities law. |