Futures market - Financial definition
Concise definition of the term futures market
The futures market is a financial marketplace where participants trade standardized contracts to buy or sell a specified quantity of an asset at a predetermined price and date in the future, providing a mechanism for hedging and speculation.
Comprehensive definition of the term futures market
The futures market, a vital component of derivatives markets, facilitates the trading of futures contracts, standardized agreements obligating the buyer to purchase, and the seller to deliver a specified asset at a predetermined future date and price. It serves as a crucial risk management tool for businesses seeking to hedge against price fluctuations in commodities, currencies, interest rates, and financial instruments, while also attracting speculators aiming to profit from anticipated price movements. Market participants include farmers, producers, investors, and financial institutions, engaging in various strategies such as arbitrage, spread trading, and directional speculation, with futures exchanges like the Chicago Mercantile Exchange (CME) and Intercontinental Exchange (ICE) serving as central trading venues.