Contracts are fungible. Prices are fairly transparent. Regulations of Exchanges apply to all transactions. No negotiation is necessary to participate in the market so that anybody can participate with initial deposit. Disadvantages Contract cannot be reversed or transferred to another person.
Prices tend to be less transparent because they are negotiated between two parties.
Transactions are not monitored so that counterparty risks remain. Because this is a standardized contract, basis risk remains. Market participants are required to pay margin calls when prices move against them. The forward contract is the only risk management tool currently used in the tea trade. Forward contracts help deal with price risks but they are less flexible than other risk management tools.