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I've got a futures account at ETrade which is backed by a normal trading account. If I put cash into the trading account it shows up as buying power in the futures account, and if I have a futures position, every day the futures account gets marked to market and cash is either added or deducted from my cash balance.

I recently used virtually all the funds in my trading account to buy T-bills, but afterwards (as in several days after) I noticed that my futures account is still showing the same buying power. If I were to enter into a futures position, how would the daily futures settlement work since there is virtually no cash in the account? I have done some searches but I have either found results on bonds/bills or futures or buying bond futures but nothing about settlement using the bonds/bills as collateral. Most sources just talk about cash as collateral for futures positions and don't mention bonds or bills, although the CME does mention accepting treasury notes and bills as collateral.

Does the answer change if I am fully collateralized versus just holding at least the maintenance margin as collateral?

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It sounds like ETrade considers T-bills to be equivalent to cash in terms of collateral. Remember that you are not settling your futures directly with CME (or any other exchange), your broker is trading on your behalf so everything is between your broker and the CME. So there doesn't have to be a 1-to-1 relationship between the collateral/cash that your broker provides CME and the collateral/cash that you provide your broker. In this case, ETrade can repo your TBills to get cash, and thus a TBill holding in your account is economically equivalent to holding cash.

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  • Thanks! But in this case, do I still get the full value of the bills at maturity? These don't pay a coupon but if they did (if it was a bond not a bill) would I still get it? Will I wind up owing interest to ETrade somehow? If they do a repo it sounds like if the value falls they would settle with the cash from the repo, so in the event of a margin call that would be the point at which they would... sell the bill if the margin call wasn't met?
    – Andy
    Nov 8, 2022 at 17:31
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    @Andy I think you would have to ask ETrade for the specifics. Let us know what they say.
    – Myggen--
    Nov 8, 2022 at 17:57
  • Thanks, I will do that. They are exceedingly slow on getting answers to questions like this (their site is saying 3-5 business days for an answer) so it may be a while...
    – Andy
    Nov 9, 2022 at 18:39
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    Well it only took TWO days for them to get back to me and tell me I had to call them to find this info out so... I guess we will see how long it takes for me to find a convenient time to do that!
    – Andy
    Nov 14, 2022 at 18:18

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