How does the End of Day (EOD) Mark-to-Market (MTM) settlement process work in futures trading?
The End of Day (EOD) Mark-to-Market (MTM) process is a key mechanism in futures trading that adjusts a trader’s ledger based on daily price movements of their open positions. It ensures all gains and losses are reflected on a day-to-day basis.
How EOD MTM settlement works
- Daily Settlement
- All open futures contracts are settled in cash at the end of each trading day.
- Closing Price Determination
- The exchange-reported closing price is used to calculate daily profit or loss.
- Difference Calculation
- For open positions: the variation between the day’s opening and closing prices is computed.
- For intraday trades: the entry price is considered instead of the previous day’s closing.
- Cash Adjustments
- Profit: The net gain is credited to your trading account.
- Loss: The loss amount is debited from your account.
- Rollover Mechanism
- The closing price becomes the reference price for the next day’s MTM calculation.
Example
Let’s say:
- You buy Nifty futures at ₹17,800
- It closes at ₹17,900
- Lot size = 50
Then your MTM profit = ₹100 × 50 = ₹5,000
This ₹5,000 will be credited to your account at day’s end.
If instead, the price closes at ₹17,700, a ₹5,000 loss will be debited from your ledger.
Always track your MTM impact daily, especially in volatile markets, to manage margin calls and avoid forced square-offs.
What if...
| Scenario | Outcome |
|---|
| Futures contract gains during day | Profit is credited to your account at day end |
| Futures contract drops in value | Loss is debited from your account |
| Position is carried forward | MTM resets daily using latest closing price |
| Intraday trade is closed | MTM is computed from entry to exit price on the same day |
Last updated: 25 Jun 2025
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