default risk in future contract

CFA Level I Derivatives
#1

Does offsetting a future contact on an exchange eliminste default risk.

#2

Yes. As the exchange performs the clearing house function & hence eliminates default risk a.k.a. counterpart risk…

#3

Futures contracts should have no default risk as your counterparty is always the clearinghouse.

(The clearinghouse ensures that it has no (or precious little) counterparty risk by requiring a margin account.)

#4

Taking an offsetting position with another futures contract should eliminate all risk since there is no default risk. This would not be the case with a forward contract because you are exposed to counterparty risk.

#5

Thanks all

#6

Yes it reduce default risk but in Forward contract because future contract are more standarised.