NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Risk Management
A client of a trading member has an unrealised mark-to-market loss on an open index futures position. Which margin is specifically meant to collect this loss on a daily basis from the client's account?
Mark-to-market margin is the margin that recovers the unrealised loss on open positions. Positions are revalued each day against the settlement price and the notional loss is collected, whereas other margins serve different purposes, such as covering extreme moves or specific delivery obligations.
- AMark-to-market marginCorrect
- BDelivery margin
- CSpecial concentration margin
- DExposure margin on cash equity
Explanation
Mark-to-market margin collects notional losses on open positions, computed by comparing the position with the day's settlement price. Delivery margin relates to securities delivery obligations. Exposure margin is a cushion for extreme moves, not for realised daily loss.
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