What Is the Difference between MTM and Final Settlement? ⎊ Path

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.

What Is the Difference between MTM and the Final Settlement of a Contract?

Differentiate between ‘Cash Settlement’ and ‘Physical Settlement’ in Derivatives

What Is the Difference between Physical and Cash Settlement in Standardized Futures?

Explain the Difference between Cash Settlement and Physical Delivery in Futures

How Does the Settlement Price Differ between Physically-Settled and Cash-Settled Futures?

What Is the Significance of the Daily Settlement Price in MTM?

How Does the Daily Mark-to-Market Process Impact the Cash Flow of a Futures Trader?

What Is the Key Difference between Cash Settlement and Physical Settlement in Derivatives?

Glossar

MTM

Valuation ⎊ Market-to-Market, or MTM, within cryptocurrency derivatives represents the continuous recalculation of the profit or loss on open positions based on real-time market prices, a practice critical for risk management and collateralization.

Daily Cash Flow Exchange

Mechanism ⎊ Daily Cash Flow Exchange within cryptocurrency derivatives represents a structured settlement of profit and loss obligations arising from options or perpetual swap contracts, typically occurring on a daily basis to mitigate counterparty risk and maintain margin solvency.