Regulatory
Futures Commission Merchant (FCM)
Reviewed by iGaming Times editorial teamLast reviewed 24 September 2026
What is FCM?
A CFTC-registered intermediary that accepts orders and holds customer money for trading on a derivatives exchange. The regulated middleman between a retail participant and a designated contract market.
Key takeaways
- An FCM is a CFTC-registered intermediary that accepts orders and holds segregated customer money for trading on a derivatives exchange.
- The largest prediction markets began as direct-to-consumer venues, concentrating functions the traditional structure keeps separate.
- Since the CFTC amended Kalshi's designation in January 2025 to permit intermediated trading, brokers can route retail orders into event contracts.
Why it matters
In conventional derivatives markets a retail participant does not face the exchange directly. An FCM takes the order, posts margin to the clearing house and holds customer funds in segregated accounts subject to CFTC rules on custody, capital and reporting. That intermediation is a substantial part of what makes the futures market’s customer protections work, and it is enforced by both the CFTC and the National Futures Association.
Prediction markets have complicated the picture because the largest venues began as direct-to-consumer platforms where the customer holds an account with the exchange itself. That model concentrates functions the traditional structure deliberately separates, and it is one reason the sector’s customer-protection debate looks different from ordinary futures. The distinction became commercially significant when Kalshi obtained a modified designation permitting intermediated futures trading in January 2025, opening the door to brokers routing retail order flow into event contracts. For the gambling industry the FCM question is the one to watch, because a prediction market reachable through an ordinary brokerage app has a distribution advantage no sportsbook can match, and it arrives without any of the state licensing that distribution would otherwise require.
The bottom line
The FCM is the customer-protection layer conventional derivatives markets rely on, and the layer direct-to-consumer prediction markets initially did without.
Sources
- CFTC Letter No. 25-02 (no-action, 31 January 2025) - Commodity Futures Trading Commission
- Futures Commission Merchants (FCMs) - Commodity Futures Trading Commission
FCM elsewhere on iGaming Times
In the news
Frequently asked questions
What is a futures commission merchant?
A futures commission merchant (FCM) is an intermediary registered with the CFTC that accepts orders for futures and related contracts and holds customer money for trading on an exchange. It posts margin to the clearing house and must keep customer funds in segregated accounts under CFTC rules on custody, capital and reporting. The CFTC has delegated FCM registration to the National Futures Association.
Why do FCMs matter for prediction markets?
The largest prediction markets began as direct-to-consumer platforms where customers hold accounts with the exchange itself. On 17 January 2025 the CFTC amended Kalshi's order of designation to remove a prohibition on FCM intermediation, opening the way for brokers to route retail orders into event contracts and giving prediction markets distribution through ordinary brokerage apps.
How does an FCM protect customers?
In conventional derivatives markets a retail participant does not face the exchange directly. The FCM takes the order, posts margin to the clearing house and holds the customer's funds in segregated accounts subject to capital and reporting rules enforced by the CFTC and the National Futures Association. That separation of functions is a substantial part of how futures customer protection works.