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HMRC internal manual

Stamp Taxes on Shares Manual

HM Revenue & Customs
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Derivatives: introduction to futures and forwards: fundamental differences between a futures and a forwards contract

  • While futures contracts are traded on an investment exchange, forward contracts are traded ‘off-exchange’ or over-the-counter.
  • A futures contract represents a standardised contract with fixed terms, to buy or sell an underlying asset at a specified future date at a pre-determined and agreed price which is set at the time of the contract. A forwards contract is a non-standardised private agreement between two parties to buy or sell an asset at a specified future date at a price which will be determined at an advance date but before the date of settlement.
  • Unlike a futures contract, the rights to a forwards contract once issued, cannot be transferred or secondary traded on an investment exchange.

See STSM112100 for the meaning of an ‘Over-The-Counter’ (OTC) transaction.