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pay/collect

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Financial Dictionary

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 Commentary

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 Links

Futures Fundamentals

See also: Clearing, Clearing House, Futures Contract, Mark to Market, Zero-Sum Game

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