Futures vs Forwards, which is more expensive? reason, higher, question, which, state

jbaldyga

Which is higher in explicit cost? For some reason I thought futures were but I'm seeing in a qbank question that they state forwards are more expensive.

Analyze_This

Does the qbank reference an LOS?

Explicit costs include:
- Broker Commission Costs
- Taxes
- Stamp Duties
- Fees Paid to Exchanges

I can't see any of those categories being higher for forwards. Implicit costs could be a different story, though.

mar350

IMO fwrds are more costly in terms of transaction costs because they are customized. Futures are standarized.

strikethree

Forwards are generally less liquid since they are customized. This leads to higher transaction costs. Other than liquidity, there isn't any real reason why one would be more expensive than the other.