The exchange-traded futures,
as compared to OTC forwards, serve the same economic purpose, yet differ in
fundamental ways. Exchange-traded contracts are standardised. In an
exchange-traded scenario where the market lot is fixed at a much lesser size
than the OTC market, equitable opportunity is provided to all classes of
investors whether large or small to participate in the futures market. The other
advantages of an Exchange traded market would be greater transparency,
efficiency and accessibility. The counterparty risk (credit risk) in a futures
contract is eliminated by the presence of a clearing house/ corporation, which
by assuming counterparty guarantee, eliminates default risk. Thus, introduction
of exchange-traded futures help in overall development of the forex market in
the country
