Purchase And Sale Statement (P&S)

What Is a Purchase And Sale Statement?

A purchase and sales (P&S) statement subtleties the sale and offsetting of a futures or options position. The futures commission merchant (FCM) sends the statement to the customer after the position is offset (closed). It incorporates the number of contracts bought or sold and the prices that were received, the gross profit or loss, commission charges, and the net profit or loss on the transaction. A confirmation statement might go with it, too.

Figuring out Purchase And Sale Statement (P&S)

The P&S statement fills in as a summary of the latest offsetting transaction activity that closes any open positions. It conveys subtleties of the transaction and any changes in margin. It is like a receipt for futures transactions. It likewise reports the new balance of an account, whether through gains or losses on the position, and furthermore when a customer adds or pulls out funds.

Conversely, a confirmation statement, likewise sent by the futures commission merchant (FCM), subtleties the opening or commencement of a futures or options position. This statement subtleties the number of contracts bought or sold and the prices at which the contracts were bought or sold, also.

Futures commissions merchants additionally send P&S statements after different occasions that modify the account balance. This incorporates customer deposits, the withdrawal of margin and when the FCM itself puts excess margin in an interest-bearing instrument to boost the customer's return.

A futures commission merchant assumes an essential part in empowering customers to take part in the futures markets. A FCM is an individual or organization, registered with the National Futures Association (NFA), associated with the solicitation or acceptance of buy or sell orders for futures or options on futures in exchange for payment of money (commission) or different assets from customers. A FCM likewise has the responsibility of gathering margin from customers.

Offsetting Positions

Albeit not its just function, the purchase and sales statement tells the customer while an existing position, either long or short, is closed, called offsetting the position. In particular, a offsetting transaction is an activity that precisely drops the risks and benefits of one more instrument in a portfolio. The trader utilizes it when it is unimaginable to expect to close or end the original transaction, as wanted. Being not able to close a position much of the time occurs with options and other more complex financial trading instruments.

For instance, assuming the customer purchased one futures contract, the later sale of that contract is definite in the P&S. Nonetheless, in the event that the customer held a short position, the purchase of an equivalent futures contract would offset that short, really eliminating the customer's exposure to that market.

Partial sales and offsets additionally show up in P&S statements.

Features

• This statement is as opposed to a confirmation statement which subtleties the opening of positions.
• The P&S statement subtleties the prices and effects of transaction in a futures account.
• It records the number of contracts of futures or options in the closing trades, as well as changes to balances.