Daily Settlement

    Daily settlement price shall be the closing price of the Futures Contracts for the trading day or such other price as may be decided by the relevant authority from time to time.

    1. All futures contracts require that traders post margins in order to trade. The futures exchange requires traders to settle the gains/losses of their accounts on a daily basis.
    2. This is called daily settlement or marking to market.
    3. Every day, the gain and loss incurred by each trader are computed based on the market price of the futures contracts.
    4. After the contracts are marked-to-market, funds are transferred from the traders who have sustained losses to traders who have incurred gains.
    5. The practice of daily settlement is equivalent to terminating a futures contract at the end of each day and reopening it the next day at the settlement price.

    Forward contracts, on the other hand, are typically settled at expiration. Until then, no money changes hands between the counterparties.

    Disclaimer: While we make every effort to update the information, products, and services on our website and related platforms/websites, inadvertent inaccuracies, typographical errors, or delays in updating the information may occur. The material provided on this site and associated web pages is for reference and general information purposes only. In case of any inconsistencies between the information provided on this site and the respective product/service document, the details mentioned in the product/service document shall prevail. Subscribers and users are advised to seek professional advice before acting on the information contained herein. It is recommended that users make an informed decision regarding any product or service after reviewing the relevant product/service document and applicable terms and conditions. If any inconsistencies are observed, please reach out to us.

    Latest Articles

    Related Stories

    Leave A Reply

    Please enter your comment!
    Please enter your name here

    Join our newsletter and stay updated!