Margin account

A futures trader is required to maintain this account which is mandated by the clearinghouse. This is to help the clearinghouse achieve its guarantee tat all parties/traders will honour their obligations.

Trader is required to deposit an initial margin when a trade is incepted. Changes in the settlement price of the futures contract result in daily gains or losses. They are credited to, or subtracted from the margin account. This is called the marking-to-market process.

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