In order to reduce the risks faced by the clearing company, both parties will be required to sign futures trading contracts to deposit the company's funds. This practice is called deposit into a deposit account. These deposits are used to ensure that both parties can fulfill their obligations when the contract expires. However, when signing the contract, the clearing company not only needs to collect the original deposit, but also needs to write the daily profit and loss statistics of the subject matter involved in the contract in the deposit account contract. This process is called paying attention to the market.
Paying attention to the market is like playing poker. At the end of each game, the amount of the bet will be transferred from the loser to the winner. From a financial point of view, every player's account is pegged by the market. Financial alternatives are so complicated that it is difficult to keep an eye on them. To identify those players who are unable to continue playing, they should be exempted from continuing the game. Similarly, the clearing company should also pay attention to the futures trading in the market every day to ensure that the seller has the resources to supply and the buyer has the funds to pay. Just like in poker games, if someone's margin account is short of funds, the settlement company will sell his contract and terminate his participation in the market.
Let's give an example to help you understand how the market is pegged. Let's take a futures contract to buy 1000 ounces of silver at a unit price of $7 per ounce as an example. It will be clearly stated in the contract that in the long-term transaction, the buyer will pay $7,000 for 1 1,000 ounces of silver. We can imagine that this short silver warehouse of $7,000 and 1 0,000 ounces can also be sold for $7,000. Now let's imagine that if the price of silver changes, when the price of silver becomes $8 per ounce, the seller needs to pay the buyer 1 1,000 dollars to ensure that the buyer can only pay $7,000 when buying 1 1,000 ounces of silver. Conversely, when the price of silver becomes $6 per ounce, the buyer of futures needs to pay 1 000 to the seller to ensure that the seller can receive $7,000 when selling 1 000 ounces of silver. Staring at the market means transferring money every day to ensure that both buyers and sellers can get the funds guaranteed in the contract.