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Unformatted text preview: Commodity Market Accounts Daily Marked To Market: Crude Oil Market Scenario: Below is a ledger from a commodity brokerage firm. One client has a spot market account, while two other clients have futures market accounts. Account #1 initially deposited $92,000 on 5/23/2010 and Account #2 initially deposited $125,000 on 5/23/2010. The futures account holders have decided to replicate 100% of the long spot contract position. Your job is to audit the daily mark to market process and find any errors that the brokers have made. Remember, futures markets are a zero-sum game. If the clients do not have sufficient funds in their respective accounts to meet the exchange margin requirements, then the firm is held responsible by the exchange for any shortfalls. Date Spot Oil Closing Price Price Daily Spot Contract - Market Value ($) MTM Futures Market P&L ($) Futures Market Account MTM Equity Excess Cash Futures Market Account MTM Equity Excess Cash Spot Contract Account Account 1 Rule: If < $0, then...
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- Spring '08
- Financial Markets