What is End of Day (EOD) MTM settlement?
It is mandatory for Futures derivative positions to be settled in cash on a daily basis. At the end of each day, settlement of open futures positions takes place at the exchange provided closing price. The difference between the opening price and the closing price is settled in cash (On the day of the transaction, the opening price is the acquisition price).
In the case of profit, the difference is added to the account of the trader and vice versa. In case of loss, the difference is deducted from the account. The subsequent day’s opening price is the previous trading day’s closing and the process repeats at the end of the day.
Is MTM settlement applicable for options trading?
No, the Mark to Market (MTM) process is not applicable in the options contracts. The MTM is applied only in case of futures contract.
What is rolling settlement?
In a rolling settlement, each trading day is considered as a trading period and trades executed during the day are settled based on the net obligations for the day. Trades in the rolling settlement are settled on a T+1 basis (i.e. 1st working day). ...
What is meant by ‘X’ Settlement or Cash Settlement?
Cash settlement occurs when a client has purchased equity shares in delivery, but the exchange failed to deliver the shares on T+1 day. There are two ways settlements happen if there is a delivery shortage: Internal Settlement: Internal settlement ...
What is T+2 settlement?
T refers to the day on which the transaction took place. T+2 means that the buyer must pay the amount in full to the seller by the second trading day after the transaction and the seller must provide the shares to the buyer by the second trading day ...
What will happen if I don't square off my Options contract on the expiry day?
If you do not square off your overnight carry forward positions of options on the expiry day then the position will be settled at a price determined by the exchange. The difference between your entry and the settlement prices will be credited or ...