Forward contracts are non-exchange-traded futures transactions (i.e. OTC) and can be categorised as derivatives. Forward transactions must always be fulfilled by the maturity date. Forwards are differentiated according to the type of underlying asset (equity indices, interest rates, commodities, currencies). Depending on the underlying asset, settlement at maturity can also take the form of a cash payment. It’s an agreement between two parties to buy or sell a specified quantity of a given commodity on pre-determined terms, with payment and delivery taking place at a later date. The terms of each contract are determined by the individual parties themselves. Unlike futures, forward transactions are not settled on an exchange, but are concluded in over-the-counter trading.