Just read from a practical question, it says forward is more liquid than future for managing foreign currency risk. What is the reason for this? Just because forward is more customizable? but it is not in a standardized market … thanks.
maybe its trying to imply that one can easily get out of forwards since they are OTC contracts (negotiated between counterparties) … but dont recall cirriculum making any explicit statements in this regard.
No, if you have ever traded currencies, most multi-nationals do transactions in forwards not on the future exchanges. There in any given day there are probably 100x the notional amount of currency forwards being done than futures. What that does is create a very liquid market for banks to cross trades and off-set risk. The futures are used more for some hedging and speculators.
Also in CFAI text term" future" is used for both forwards and future contracts