The futures markets typically use high leverage. Futures contracts may only require a deposit of a fraction of the contract amount with a broker.
I know how margin trading works, but I want to understand why it is so common in the futures markets.
For instance, why does an oil futures contract need to be 1,000 barrels and not less? This makes the basic contract be worth in the five-digit ballpark.
Is it because the market used to cater mostly to institutional investors and those market participants who actually do the physical settlement of the underlying commodities?