Futures Commission Merchants

A futures brokerage firm, known as a futures commission merchant (FCM), is the intermediary between public customers, including hedgers and institutional investors, and the exchanges; it is the only entity outside the futures clearinghouse that can hold customer funds. A brokerage firm provides the facilities to execute customer orders on the exchange and maintains records of each customer's positions, margin deposits, money balances and completed transactions. In return for providing these services, a brokerage firm collects commissions.

In the United States, a futures brokerage firm must meet a number of regulatory requirements, including the maintenance of a minimum level of net capital. A futures brokerage firm also must be a member of the National Futures Association (NFA), an industry-wide self-regulatory organization. An FCM may be a full-service or a discount firm. Some FCMs are part of national or regional brokerage companies that also offer securities and other financial services, while other FCMs offer only futures and/or options on futures to their customers. In addition, some FCMs have as a parent or are related to a commercial bank, agribusiness company or other commercial enterprise.