EXAMPLE FOR MARK TO MARKET

[sunandaC]

Same day if Sensex closes at 4400

contract size will be = Rs. 2,20,000

Thus loss of Rs. 5000 (payable before the next trading takes place)

total initial margin paid on the next day = 13,200 (6% of 2,20,000)

Therefore total loss is Rs.5000 - Rs.300 = Rs.4700

(payable by the investor to his broker)


Thus in the futures market there can be mark to market loss,

mark to market profit, initial margin profit or initial margin loss.

 

[rosemarry2]

Same day if Sensex closes at 4400

contract size will be = Rs. 2,20,000

Thus loss of Rs. 5000 (payable before the next trading takes place)

total initial margin paid on the next day = 13,200 (6% of 2,20,000)

Therefore total loss is Rs.5000 - Rs.300 = Rs.4700

(payable by the investor to his broker)


Thus in the futures market there can be mark to market loss,

mark to market profit, initial margin profit or initial margin loss.

Hey there,

Please check attachment for Notes on Financial Institutions Mark-To-Market, so please download and check it.