Definition
MTM Margin
MTM margin is the amount collected to cover mark-to-market losses on open positions as prices move against you.
Every day (and intraday for monitoring), open F&O positions are marked to market at the current price. If the position has moved against you, the resulting loss is debited as MTM margin, ensuring losses are funded as they accrue rather than only at exit.
On the NSE, MTM is settled in cash daily for futures, so a losing long futures position sees money debited each evening. If your account cannot cover the MTM loss, you face a margin call and possible auto square-off, which is why traders keep a cushion above the bare minimum margin.
Related terms
- Mark to MarketMark to market (MTM) is the daily settlement of profit or loss on a futures position based on that day's closing price.
- Mark PriceMark price is a fair reference price used to value open positions and calculate margins, avoiding manipulation by stray trades.
- SPAN MarginSPAN margin is the core risk-based margin for F&O positions, calculated by simulating worst-case price and volatility moves.
- Margin CallA margin call is a demand from your broker to add funds when your account falls below the required margin.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.