Why Do Futures Exchanges Require Daily 'Marking to Market'? ⎊ Path

Why Do Futures Exchanges Require Daily ‘Marking to Market’?

Marking to Market (MTM) is the daily process of settling the gains and losses on a futures contract to the trader's margin account. This ensures that all parties' accounts reflect the current market value and that profits and losses are realized daily.

MTM significantly reduces counterparty risk by preventing large, accumulated losses that could lead to default.

What Is the Concept of “Marking to Market” in Futures Accounting?

What Is the Primary Purpose of Marking-to-Market in Futures?

Does MTM Apply to Options Contracts in the Same Way as Futures?

How Do Exchanges Use MTM Data to Calculate Margin Requirements?

How Does MTM Affect the Cash Flow of a Futures Trader?

What Is a Margin Call and How Is It Related to Marking-to-Market?

What Is the Benefit of Daily Cash Settlement for the Overall Market Stability?

How Is the ‘Marking-to-Market’ Process Performed for Futures Contracts?