Futures Law and Legal Definition

Futures are standardized contracts that require delivery on a specified future date at a specified price certain financial assets or commodities of specified quality and quantity. Forward exchange entails a contract to exchange one currency for another at a fixed date in the future at a specified exchange rate. In international trade, buying or selling futures contracts can protect firms against decreases in the value of a currency they expect to receive at a future date, or increases in the value of a currency that they are obligated to pay at a future date. Futures are used for both speculation and hedging, and are usually traded on a commodity exchange.

Futures contracts and options on futures contracts exist for a wide range of products, including agricultural products such as coffee and soybeans, livestock such as pork bellies and cattle, natural resources such as oil and gas, precious metal such as gold and platinum, financial instruments such as bonds and stock indices, and currencies.