Some things in life go great together, such as peanut butter and jelly, Donny and Marie, and even stocks & options. The same applies to your securities (stocks & options) and futures account, but since futures are not securities, they are separated. Futures are legally binding agreements between two parties and are handled differently than a typical portfolio of stocks & options.
A Clear difference
Equities and futures clear differently
You are probably wondering why futures and securities accounts need separation in the first place? Futures and securities clear differently. Equity and equity options cleared through our clearinghouse, Apex Clearing Corp. Meanwhile, futures and options on futures clear through a futures commission merchant, widely known in the industry as an FCM. tastyworks’ FCM is FCStone, and they handle the clearing of all futures trading.
Fund handling between accounts
Cash mainly resides in your securities account and sweeps accordingly
Although your account is separated, tastyworks provides a combined account view for your securities and futures trading for seamless trading experience. Another driver behind the separation is mainly due to the margin requirements (performance bond) of futures. Funds primarily reside in your securities account and are swept between the accounts daily when positions mark-to-market.
Additionally, when there is a margin deficit in the futures account, funds sweep from the securities account to the futures account. If there is any margin excess in the futures account, the excess margin funds are swept back into the securities account.
Please consider the following about sweeping
The sweeping of funds between accounts occurs behind-the-scenes, but there are some things you need to keep tabs on if you decide to trade securities and futures.
- For pattern day trader (PDT) purposes, the securities account must maintain an account value of at least $25,000. Funds in the futures account do not count towards the $25,000 requirement.
- Funds in the futures account are not included in your securities starting day trade buying power.
- Sweeping funds from the securities account to the futures account could potentially result in a debit cash balance in the securities account. Debit cash balances are subject to margin interest charges. To view how to calculate the interest on a margin debit balance, please click here.
- SIPC insures securities accounts. Futures accounts are not insured.
Why is my account balance on my Apex monthly statement wrong?
When trading futures, your positions are held between two firms (Apex Clearing & FCStone)
Are you looking at your monthly Apex statement and wonder why it may not reflect your actual account balance? Well, it's not a miscalculation, and you're not missing any money. Again, it is due to the separation of your securities account (Apex) and your futures account (FCStone).
To reconcile your total account balance, please refer to your Apex monthly statement as well as that latest futures trade confirmation (daily statement) for the month you're looking up. You may reconcile your total account balance by taking the sum of your closing balance on your Apex statement as well as the Total Equity line item in your latest futures confirmation.
Accounts above $25,000 could receive an EM Call
If the cash sweep causes your securities account to drop below $25K
A margin account that is eligible to maintain a Pattern Day Trader status and valued over $25,000 can still receive an Equity Maintenance (EM) as a result of a cash sweep. When the cash sweep causes the securities account to drop below $25,000, then an EM call will issue. To learn more about EM calls, please click here.
Let’s use a $30,000 trading account that is flagged and eligible as a PDT. The account goes long an /ES contract with a $5,500 margin requirement. The account owner decides to hold the /ES overnight, and $5,500 is swept from the securities account to the futures account to satisfy the overnight requirement. Due to the sweep, the securities account would drop to $24,500 and receive a $500 EM call the next trading day due to the minimum requirements needed to maintain an account with a PDT status.
When trading futures, please keep in mind any effects to your securities account from an overnight cash sweep due to a futures margin requirements or a futures position marking to market.