A private, over-the-counter (OTC) derivatives contract for the sale and purchase of a specified asset or basket of assets at a specified price on a specified future date. Forward contracts are similar to futures contracts, however, futures contracts are standardized and traded on registered exchanges, whereas forward contracts are bilateral agreements with bespoke terms.

Assets that are most commonly referenced in forward contracts include equities, treasuries, index units, currencies, and commodities. Forward contracts may be cash settled (non-deliverable) or physically settled (deliverable). Like most derivatives contracts, forward contracts may be used as hedges as well as for speculative investment.

For further details on forward contracts, see Practice Notes, Derivatives: Overview (US): Forwards and Futures and Equity Derivatives: Overview (US): Equity Forwards.