Let's have a look at the differences between forwards and futures. Forwards are over the counter or OTC contracts. This means they're crafted out of the public eye with the terms such as the forward price and the quantity of the asset tailored in private negotiations between the parties involved. There's no standard template. These agreements are as unique as the needs they serve, offering unparalleled flexibility. They can be shaped to fit the exact specifications required by the counterparties, a characteristic that is invaluable in hedging specific risks or in capitalizing on anticipated market movements. However, this customization comes with a layer of complexity in valuation. As forward contracts are not traded on a centralized exchange, there's no ticker tape running their prices and no readily available market value for reference. This lack of transparency necessitates the use of sophisticated valuation models to determine a fair price and to provide a means of marketing positions to market an essential process for risk management and accounting. Futures, on the other hand, are the quintessential exchange traded contract. They are fully standardized. The futures exchange dictates the terms from the size of the contract to the settlement procedures, even right down to the expiration date. This uniformity fuels liquidity, ensuring that these contracts can be bought and sold with ease often at a moment's notice. This liquidity is a cornerstone of risk management strategies, allowing for quick entry and exit from positions as market conditions evolve.

The centralization of futures trading brings another benefit, Transparency. The marketplace for futures is a matter of public record available in real time. This allows for the immediate valuation of open position, a feature known as Mark-to-market. Moreover, future exchanges provide a wealth of data, including trading volumes and open interest. These figures are more than missed statistics. They're the pulse of the market offering insights into the sentiment and trends that drive market dynamics.