A forward contract and a swap are both financial derivatives used for hedging and speculation in financial markets. However, they differ significantly in their structure and operation. A forward contract is a private agreement between two parties to buy or sell an asset at a specified future date for a price agreed upon today. The key feature of a forward contract is that there is only one exchange of cash flows that occurs at a future date. This exchange is the culmination of the contract, where the agreed-upon asset is delivered, and the payment is made. On the other hand, a swap is a derivative contract through which two parties exchange financial instruments. These instruments can be almost anything, but most swaps involve cash flows based on a notional principal amount agreed upon by both parties. Unlike forward contracts, swaps involve multiple exchanges of cash flows on various future dates. These cash flows are often calculated over the notional principal amount using different interest rates. Therefore, choice D accurately differentiates between swaps and forward contracts.

Choice A is incorrect. Both forward contracts and swaps are traded over-the-counter (OTC), not on exchanges. These instruments are typically customized to the needs of the parties involved, which makes them unsuitable for exchange trading.

Choice B is incorrect. Both forward contract holders and swap holders have obligations, not rights, to buy or sell the underlying security in the future. The difference lies in their structure: a forward contract involves a single future transaction, while a swap involves multiple transactions.