Net liquidating value

For better or worse, it turns out that market failures tend to be the best teachers. This allowed the FCM to believe that it was in regulatory compliance, with hundreds of millions of dollars to spare, even when the amount in segregation was actually in or perilously close to being in deficit. futures contracts, then ask your FCM to represent that it will determine its customer segregation obligations under "net liquidating equity method," rather than the alternative method found in CFTC Rule 30.7.

In that sense, SMA helps to maintain a stable account value and minimize unnecessary funding transactions.

The orderly liquidation value (OLV) is typically included in an appraisal of hard tangible assets (i.e., equipment).

It is an estimate of the gross amount that the tangible assets would fetch in an auction-style liquidation with the seller needing to sell the assets on an "as-is, where-is" basis.

Transactions which serve to increase SMA include cash deposits, interest income or dividends received (on a dollar for dollar basis) or security sales (50% of the net proceeds).

It’s important to note that the SMA balance represents an aggregation of each historical bookkeeping entry impacting its level starting from the time the account was opened.

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