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.
You are probably wondering why futures and securities accounts need separation in the first place? Simply put, futures and securities clear differently. Equity and options cleared through our clearinghouse, Apex Clearing Corp. Meanwhile, 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.
Although your account is separated, tastyworks provides a combined account view for your securities and futures trading for a 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 on a daily basis, as necessary, to satisfy any existing margin requirements for futures positions.
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.
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.
Equity maintenance calls (EM) can occur on a margin account that is flagged as a PDT if the margin requirement swept to the futures account causes the securities account to drop below $25,000.
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 trades an /ES contract with a $5,500 margin requirement. The account owner decides to hold the contract overnight and $5,500 is swept from the security 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 sweep of cash due to futures margin requirements or futures positions marking to market.