This standardization of contract terms facilitates the creation of a more liquid market for derivatives. If all market participants know that derivatives on the euro trade in 100,000-unit lots and that they all expire only on certain days, the market functions more effectively than it would if there were derivatives with many different unit sizes and expiration days competing in the same market at the same time. This standardization makes it easier to provide liquidity. Through designated market makers, derivatives exchanges guarantee that derivatives can be bought and sold.3