[Verse 1]
Meet the futures contract, standardized and clean
A promise to buy or sell on a future scene
Unlike forwards made custom between just two
Futures trade on exchanges for me and you
The clearing house stands between each trade
Guaranteeing promises that both parties made
[Chorus]
Standard terms, exchange floors, clearing house secures
Size and dates are set in stone, that's how futures endures
Mark to market every day, margins kept in line
Standardized, organized, futures by design
[Verse 2]
Forward contracts are private, made one-on-one
Custom terms and dates until the deal is done
But futures are different, they're standardized tight
Same contract size and delivery date, everything's right
Trade them on exchanges like stocks on the floor
Liquidity flowing, there's always much more
[Chorus]
Standard terms, exchange floors, clearing house secures
Size and dates are set in stone, that's how futures endures
Mark to market every day, margins kept in line
Standardized, organized, futures by design
[Bridge]
Chicago Mercantile, New York too
Exchanges worldwide help contracts flow through
Initial margin, maintenance calls
The clearing house catches you if your position falls
No credit risk between the trading pair
The clearing house is always standing there
[Verse 3]
Forwards have credit risk between counterparts
But futures eliminate that right from the start
Daily settlement keeps the losses small
Marking to market prevents a major fall
Standardization means you can trade out
Close your position without any doubt
[Chorus]
Standard terms, exchange floors, clearing house secures
Size and dates are set in stone, that's how futures endures
Mark to market every day, margins kept in line
Standardized, organized, futures by design
[Outro]
From corn to currencies, oil to gold
Futures contracts help stories unfold
Standard features make them easy to trade
That's how the futures market was made