Marking to the Market

What this video covers

• The six-step mark-to-market deposit sequence on an uncompleted contract, and why the demanding member may (not must) demand the deposit
• How to calculate the exact deposit amount: the difference between contract price and current market price, not the full notional value
• The three valid locations for holding the deposit: directly with the demanding member, with a third-party depository, or with a Federal Reserve System member
• The preferred update frequency for marks, and why a recovery in market price triggers a mandatory refund of deposit or excess
• Why failure to deposit a properly demanded mark is a default event that triggers the close-out framework with a buy-in or sell-out notice
• The distinction between the inter-member mark (external, member-to-member, street-side) and customer margin maintenance (internal, firm-to-customer), and why both regimes can operate simultaneously
• The principal's responsibilities for written supervisory procedures (WSPs), exposure tracking, and documentation of every mark demand and deposit