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This may be a silly question on futures trading, but I haven't found a clear answer on the CME website.

For the Nikkei 225 Yen contract on the CME, which is denominated in Yen, the margin is also given in terms of Yen, e.g. currently it is 450,000 JPY .

I trade this contract via a broker, for example Interactive Brokers (IB) or etrade or any broker offering futures, and also suppose I have a USD base account.

How do a brokers in the US (such as IB or etrade, etc.) take the margin paid my account? Do they convert some of the USD into JPY and then retain it as margin?

Subsequently, if I had a profit, will they give me back JPY or will they convert it into USD?

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I cannot say how every broker will do it, but from personal experience:

They will ask you for an amount in USD, that its to be calculated using their fx pricing and future valuation. Any margin requirement will be asked in USD and payed in USD.

Best Regards

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  • $\begingroup$ which broker did you use? what about the P&L once you close out the futures contract - was it automatically converted back to USD? $\endgroup$ – uday Dec 24 '15 at 17:28
  • $\begingroup$ I cannot disclose the broker that I use since I work for a firm, but yes automatically converted to USD using their fx princing for the day you close the position $\endgroup$ – FernandoG Dec 24 '15 at 17:35
  • $\begingroup$ Yes this is what most brokers do, and what IB does as well. ibkb.interactivebrokers.com/tag/base-currency $\endgroup$ – pyCthon Dec 25 '15 at 2:34
  • $\begingroup$ @pyCthon, thanks for the link. it was very useful $\endgroup$ – uday Dec 25 '15 at 6:13
  • $\begingroup$ In my experience with various brokers (including IB) this is not what happens at all. Once your trading creates a balance in JPY (positive or negative) you account becomes a multi-currency account, with separete balances in USD and JPY. There is no automatic conversion of JPY to USD and it is entirely up to you to make such conversion if and when you want. Of course, if your base currency is USD, the broker, as a courtesy, shows you the overall value of your account translated to USD at current fx rates, but you still have (pos or neg) balances in each of the two currencies. $\endgroup$ – noob2 Dec 28 '15 at 14:51

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