09 Apr Fcm Customer Agreement
When a customer wishes to acquire (or sell) a futures contract, he contacts a FCM who acts as an intermediary by buying (or selling) the contract on behalf of the client. It`s a bit like what an equity broker does. At the due date or delivery date, FCM also ensures that the contract is executed and that the goods or cash are delivered to the customer. In particular, FCM allows farmers and businesses (utility companies) to hedge their risks and allow clients access to stock markets and clearing houses. They can be subsidiaries of large financial firms or small independent companies. However, in recent years, and especially since the passage of the Dodd-Frank legislation in 2010, the number of FCMs, especially small independents, has decreased as a result of the regulatory effort. These include many brokerages to which investors are resigned to the futures markets. FCMs must be registered with the National Futures Association (NFA). This is necessary, unless the entity only takes over transactions with respect to the entity itself or associated companies, senior officers or directors; or if the entity is a non-U.S. company. companies that are not established in the United States. A Merchant Futures Commission (FCM) plays an essential role in enabling clients to participate in futures markets. A FCM is a person or organization that participates in the invitation or acceptance of orders to purchase or sell futures or futures options in exchange for a payment of money (commission) or other client assets.
A FCM is also responsible for collecting margins from its customers. FCM is also responsible for guaranteeing the delivery of assets after the expiry of the futures contract. A FCM may be either a clearing company that is a member of one or more exchanges (a “compensation FCM”) or a non-clearing member company (FCM non-clearing) (FCM). Compensation fcms are required to hold large deposits with the clearing house of which it is exchanged. A non-clearing FCM must make the transactions of its customers by compensation FCM. Brookings Institution to be abolished. “The numbers are falling in the financial industry.” Go to Nov.