Forwards Trading

Forwards Trading

A forwards is a tailored order to buy or sell allowances at a predetermined price and time in the future


Advantages:
  • A forwards contract eliminates the price risk by fixing the price of the allowances in advance
  • Unlike futures, forwards allow flexibility in terms of the size and the settlement of the allowances negotiated

Aim:
  • Forwards are utilized to hedge exposure to price changes and for budget planning