Connect with us

Hi, what are you looking for?


Futures Commission Merchant (FCM): Definition, Role, Registration

File Photo: Futures Commission Merchant (FCM): Definition, Role, Registration
File Photo: Futures Commission Merchant (FCM): Definition, Role, Registration File Photo: Futures Commission Merchant (FCM): Definition, Role, Registration

Defining Futures Commission Merchants (FCM)

Futures commission merchants (FCMs) let clients engage in futures markets. An FCM is a person or organization that solicits or accepts buy or sell orders for futures or options in return for commissions or other assets from customers. As an FCM, you must collect margins from clients. The FCM ensures asset delivery after the futures contract expires.

FCMs in Europe are like futures market clearing members.

Futures Commission Merchant basics

FCMs must register with the National Futures Association (NFA). This is necessary unless the company handles transactions only for the firm, its affiliates, senior executives, or directors. It is a non-U.S. resident or firm with non-U.S. clients and sends trades to an FCM for clearing.

An FCM can be a clearing or non-clearing member firm of one or more exchanges. Clearing FCMs must maintain significant deposits with the clearing house of any exchange they are a part of. Non-clearing FCMs must clear their clients’ transactions.

FCMs must additionally comply with CFTC guidelines:

  • Separating customer and FCM money
  • Minimum $1,000,000 adjusted net capital
  • Employee and connected broker reporting, recordkeeping, and supervision
  • The CFTC receives monthly financial reports.

Customers can get credit and place futures contract orders with a futures commission merchant. Many brokerages work with investors in the futures markets.

For customers to buy or sell futures contracts, an FCM acts as a middleman to make the purchase or sale. It resembles what a stockbroker does with equities. Upon maturity, the FCM ensures contract fulfillment and the transfer of goods or cash to the consumer.

FCMs help farmers and entrepreneurs mitigate risks and access exchanges and clearinghouses. They might be standalone or subsidiaries of more significant financial organizations. Recently, especially after the 2010 Dodd-Frank law, the number of tiny FCMs, or tiny independents, has decreased due to regulatory burdens.


  • Customers can trade futures contracts with a futures commission merchant (FCM).
  • According to the contract, the FCM collects client margins and delivers assets or cash.
  • FCMs must be NFA-registered and CFTC-accredited.

You May Also Like

File Photo: Frictionless Sales

Frictionless Sales

7 min read

Someone once used the term “frictionless selling” to describe a sales process that is smooth and easy. It comes from the thought that things should be as easy and smooth for the customer a...  Read more

File Photo: Freemium


12 min read

What is Freemium? According to the freemium business model, a product or service is given away for free, but customers can pay more for a more advanced plan that includes extra benefits. Freemium plan...  Read more

File Photo: Forrester B2B Summit

Forrester B2B Summit

17 min read

Before the Forrester B2B Summit, it was called the Forrester Sirius Decisions Summit. It began in the early 2000s. At first, the event’s main goal was to give the B2B community thought leadershi...  Read more

Notice: The Biznob uses cookies to provide necessary website functionality, improve your experience and analyze our traffic. By using our website, you agree to our Privacy Policy and our Cookie Policy.