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
Related Articles
How often is Mark to Market (MTM) assessed in trading?
In trading, MTM (Mark to Market) is typically calculated daily. At the end of each trading day, MTM helps determine the day's profits or losses on open positions. This regular assessment allows traders to effectively monitor and manage their ...
Does MTM settlement apply to options trading?
No, the Mark to Market (MTM) settlement process does not apply to options contracts. MTM settlement is a mechanism used for futures contracts, where the daily gains and losses are calculated and settled based on the market price of the underlying ...
What is Mark to Market (MTM)?
Mark to Market (MTM) is a daily accounting method used to determine the current value of your trading positions. At the end of each trading day, open positions are adjusted to reflect the prevailing market price, which helps assess unrealized gains ...
How does futures trading work?
Futures trading lets you speculate on the price movement of assets—like stocks or indices—without needing to buy them outright. On FYERS, you trade futures contracts by paying a margin instead of the full contract value, giving you leveraged exposure ...
What is rollover in futures trading?
Rollover in futures trading means shifting your open position from a contract nearing expiry to a later contract month. This allows traders to maintain market exposure without taking physical delivery or settling the position. How rollover works Exit ...