Much like a currency forward, a currency future is a contractual agreement to buy or sell an amount of one currency against payment in another currency at a fixed future date. The exchange rate is determined at the time the contract is bought or sold. There are two key differences between forward and futures contracts. While the underlying amount and the value date of a forward contract can be negotiated between buyers and sellers, they are both standardised in the case of futures contracts. This is because forward contracts are ‘over-the-counter’ (informally arranged between buyers and sellers), whereas futures contracts are ‘exchange-based’ (formally arranged by a clearinghouse that buys and sells all positions). Because value dates and contract sizes are pre-determined, futures markets do not require participants to mutually check their creditworthiness. And, as standardised amounts are low, they provide a tempting tool for speculators. However, their cash flow implication (the required margins) and their lack of flexibility means that most companies, when hedging their FX exposure, rarely choose futures contracts. Instead, they rely on forward contracts, which are used in most Currency Management Automation solutions.