Terminkontrakt

Terminkontrakt, or forward contract, is a customized financial instrument in which two parties commit to buy or sell an asset at a specified price on a future date. The contract is typically negotiated privately and traded over the counter (OTC), allowing full tailoring of the asset, quantity, price, and settlement date. Because it is not standardized or cleared through an exchange, it carries counterparty risk.

Settlement occurs at a preset future date. The contract may result in physical delivery of the asset or, more commonly in financial contexts, cash settlement equal to the difference between the spot price at maturity and the agreed forward price. The price fixed at contract inception is often called the forward price. For commodities, forwards may result in actual delivery; for many financial forwards, cash settlement is more common.

Terminkontrakt can be written on a wide range of underlying assets, including currencies, commodities, bonds, and equities. They are used for hedging against adverse price movements in purchase or sale of assets, locking in costs or revenues, and speculating on future price changes.

Valuation and risk considerations differ from exchange-traded futures. Forwards are typically zero at inception for the parties, but their value fluctuates with changes in the underlying asset’s price and may involve credit risk. Because they are private agreements, they often require careful credit assessment and, in some cases, collateral arrangements to mitigate risk.