Trading in agreements to buy or sell an asset at a future time for a certain price. The contract is normally tradable and usually standardized. A clearing house provides the mechanisms to guarantee to the parites that the contract will be honoured.
One of the earliest organized sport and futures markets began in Osaka, Japan, during the Tokugawa era. The Osaka Rice Exchange was organized in 1697. The first type of transaction that occurred was "spot" rice sales in exchange for rice tickets. These tickets were essentially warehouse receipts. They were issued by daimyos, temples and shrines. Eventually these tickets became negotiable and appeared to be regularly bought and sold. The issuance and negotiability of the tickets thus defined the commodity. The Tokugawa shogunate (central government) was centred in Edo (Tokyo) and required the lords to spend part of their year in Edo to prevent insurgencies. Forward transactions evolved as feudal lords had to raise cash to meet their obligations and keep up appearances. These forward transactions were termed "book transactions". They were legitimized in 1730 and marked the beginning of an era of organized futures markets in Japan.