A futures commission merchant (FCM) is a company that solicits or accepts orders to purchase or sell futures contracts, options on futures, retail off-exchange forex contracts, or swaps, and then pays money or other assets to consumers to fulfill those orders. If your company is soliciting or accepting orders to purchase or sell retail off-exchange forex contracts, as well as accepting money or assets from retail consumers, it must be designated as a Forex Dealer Member and meet the conditions listed on the Forex Dealer Member landing page.
- Handles transactions only for the firm, its affiliates, top officers, and directors; or
- Is a non-U.S. resident or a firm with only non-U.S. customers that sends all trades to a CFTC-registered FCM for clearing.
Is an FCM the same as a broker dealer?
Futures commission merchants (FCM) and introducing brokers (IB) are SEC-registered broker-dealers who only sell security futures products on contract marketplaces.
Is a futures commission merchant (FCM) a clearing broker?
A FCM can function as a go-between for a customer and the exchange members who execute or settle trades. A FCM can also be a member of an exchange and act as a clearing member.
Is a financial clearinghouse an FCM?
A FCM / clearing firm is an entity that meets the standards for clearing membership at the clearing house(s) and is permitted to clear some or all of TraditionSEF’s cleared swaps for and on behalf of TraditionSEF’s participants and customers.
The CFTC’s pre-trade credit check requirement placed on SEFs prior to the execution of cleared swaps necessitates the use of FCMs / clearing firms.
Prior to placing orders for cleared swaps on TraditionSEF, each participant and client must have risk-based limitations in place through their FCM/clearing company.
FCMs / clearing companies can use our native member management dashboard or a third-party credit hub to apply risk-based credit limitations to TraditionSEF for customers or participants.
What is the total number of FCMs?
Our clients are divided among the six FCMs that we utilize, and the FCM selection procedure varies depending on the individual demands of each client. Those FCMs that are not suited to handle managed futures accounts should be avoided by managed futures investors.
Can an FCM keep a customer’s money?
NOTE: Under current Commission guidelines, an FCM may store client monies put in the foreign futures and foreign options secured amount account for additional purposes.
When does an FCM have to file unaudited financial reports?
- Futures commission merchants (FCMs) must file unaudited financial reports with the Commission and their designated self-regulatory bodies on a monthly basis (Form 1-FR-FCM).
- Non-guaranteed introducing brokers (IBs) must produce unaudited financial reports with the National Futures Association every two years (Forms 1-FR-IB).
- FCMs and non-guaranteed IBs must also file annual financial reports that are certified. Financial statements and CFTC-specific schedules must be included in these reports, as well as an independent auditor’s opinion covering the statements and schedules.
- In the 1-FR-FCM Instructions Manual and an annual letter given to FCMs, the Division of Clearing and Intermediary Oversight provides guidelines for drafting and reporting FCM financial reports.
Is CME considered an FCM?
Customers can access CME Clearing through clearing members, who must be registered as Futures Commission Merchants (FCM). The FCM is responsible for the customer’s financial obligations to CME. Customers’ collateral must be kept separate from an FCM’s own finances.
