Booking the Basis

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Booking the Basis

In some forward contracts, an agreement between a buyer and a seller allowing one or the other to determine the price of the underlying asset described in the forward at some future date. Booking the basis occurs according to some formula agreed at the outset so the party does not simply make up a price. Once the future date occurs, the price of the underlying asset is set and remains that way until the forward contract matures. Booking the basis should not be confused with a basis book.