How Does MTM Relate to Margin Requirements?
Marking-to-market (MTM) directly determines the status of a trader's margin account in futures trading. The daily gains or losses settled via MTM are added to or subtracted from the margin account.
If the debited losses cause the account balance to fall below the maintenance margin, the clearinghouse issues a margin call. Therefore, MTM is the mechanism that tests the sufficiency of the margin and enforces the margin requirements to ensure solvency.
