What Is ‘Marking-to-Market’ in the Context of Futures Contracts?

Marking-to-market (MTM) is the daily process of adjusting a futures contract's value to its current market price. The resulting profit or loss is credited or debited to the trader's margin account.

This daily settlement ensures that risk exposure is managed and prevents the accumulation of large losses. It also guarantees that the margin account reflects the current value of the position.

MTM is a key feature of exchange-traded derivatives.