What Is the Difference between MTM and Final Settlement?
Marking-to-market (MTM) is the ongoing, daily process of settling profits and losses on a futures contract until expiration. It is a daily cash flow exchange that keeps the margin account updated.
Final settlement, in contrast, is the one-time event that occurs on the contract's expiration date. At final settlement, the remaining open position is closed, and the final profit or loss is calculated and exchanged, either through cash settlement or physical delivery of the underlying asset.
