Point Balance

What Is Point Balance?

A point balance is a statement produced every month by futures brokers that shows the unrealized profits and losses on a client's open futures contracts.

Key Takeaways

  • A point balance is a statement produced each calendar month indicating the profits and losses of a client's open futures contracts. 
  • Futures brokerages, or futures commission merchants (FCM), are required by federal regulations to issue the point balance statements.
  • The point balances are based on the official closing or settlement prices of futures contracts held in an investor's portfolio.

Understanding Point Balance

Futures brokerages, or futures commission merchants (FCMs), are required by federal regulations to issue the point balance statements, either on the last business day of each month or any regular monthly date. The point balances are based on the official closing or settlement prices of futures contracts held in an investor's portfolio. This provides an overview of the overall portfolio condition.

The point balance statement shows the most recent prices and amounts of both long and short open futures contracts.

Brokerages are also required under federal regulations to issue similar statements each month for open commodity options transactions. With options trades, however, the contracts can be sorted by delivery date, expiration date, and strike price.

Benefits of Creating a Point Balance

A point balance statement can be useful for both the account holder and the FCMs because it gives both parties a view of the health of any given investment portfolio or trading account.

Much like an account balance, this can be helpful for an account holder who doesn't track the market—and the profit or loss on any given investment—every day. Similarly, point balance statements can give FCMs, which often provide margin loans to account holders, a gauge of the health of its customer's trading accounts.

Article Sources
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  1. Cornell Law School. "17 CFR § 1.34 - Monthly Record, Point Balance." Accessed Sept. 2, 2021.

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