Pay/Collect
An abbreviated reference to the payment or collection of funds (after futures positions have been marked to market) between clearing members and their respective clearing houses. Investopedia Says:
Typically, futures positions are marked to market every evening after exchanges are closed for trading. As futures trading is a zero-sum game, in marking to market, one side of the futures position will be in a deficit position while the other in a surplus. This imbalance is offset through the pay/collect transactions executed by the brokers to their clearing organizations. Related Terms:
Clearing
Clearing House
Futures Contract
Mark to Market
Zero-Sum Game |