Which trait is NOT characteristic of futures?

Futures contracts are indeed characterized by standardized terms, which is essential for their functioning in organized exchanges. Each futures contract specifies the asset to be traded, the quantity, delivery terms, and the expiration date, ensuring uniformity across trades. This standardization facilitates liquidity, meaning traders can easily enter and exit positions without significant price impact due to the involvement of many market participants.

The promise to buy or sell assets is inherent in futures contracts, as they obligate the parties to transact at a predetermined price regardless of market fluctuations at the time of delivery. Furthermore, liquidity and cost-effectiveness are fundamental traits of futures markets, where high trading volumes help narrow bid-ask spreads, making trading more accessible and lower in cost for investors.

In contrast, non-standardized terms do not apply to futures; they are distinctly different from forward contracts, which can have customized terms like quantity and delivery specifics. This significant difference emphasizes the standardized nature of futures, reinforcing the importance of consistency and uniformity in the trading process.