Difference Between Cash Market and Future Market

Cash Market and Future Market: Financial markets are platforms where financial instruments such as securities, currencies, and commodities are generated and exchanged between buyers and sellers. These markets come in various types based on their characteristics, including nature, claim, time, and structure. Time-wise, they can be categorized into Cash Market and Future Market. In a Cash Market, transactions involve immediate payment and real-time ownership transfer to the buyer. In contrast, Future Markets facilitate ownership transfer on a predetermined future date, with payment made on the current day.

Cash Market and Future Market Meaning

A cash market is a marketplace where commodities and securities are bought and exchanged for immediate cash. It is often referred to as a spot market because transactions are settled instantly. These transactions can occur within regulated environments like stock exchanges or through unregulated over-the-counter trades.

On the other hand, a futures market is a trading platform where agreements for future transactions are bought and sold. A futures contract signifies an arrangement to be fulfilled at a later date. It involves two parties, where one agrees to buy a specific quantity of a commodity or financial instrument at an agreed-upon price. The delivery of the goods or assets takes place on a specified future date.

Difference Between Cash Market and Future Market

The table provided below summarizes the key distinctions between Cash Market and Future Market: