Futures Commission Merchant (FCM)

An FCM is a Futures Commission Merchant.

An FCM is able to handle futures contract orders and can also extend credit to clients that wish to enter into these positions. Many of the brokers that futures investors deal with have this capability.

An FCM is an individual or organization which does both of the following:

• Solicits or accepts orders to buy or sell futures contracts or options on futures and
• Accepts money or other assets from customers to support such orders.

Registration is required. There are no exemptions.

An FCM is required to file the following:

• A completed online Form 7-R.
• A completed online Form 8-R, fingerprint card and fee of $85 for each individual principal. Fingerprint card and fee are not required if such person is currently registered with the CFTC in any capacity or is listed as a principal of a current CFTC registrant.
• Individual principals and branch office managers who are applying for registration as an associated person must satisfy all applicable filing requirements. Also, for each branch office manager proof of passage of the futures branch office manager examination (Series 30) or sponsorship by a broker-dealer and proof of having met the branch office manager requirements of either the New York Stock Exchange or the National Association of Securities Dealers, Inc.
• A completed Form 1-FR-FCM or FOCUS Report (certified audit).
• A statement describing the source of the current assets of the FCM applicant combined with a representation that the applicant's capital has been contributed for the purpose of operating the business of an FCM and will continue to be used for that purpose.
• A non-refundable registration fee of $500.

SEC-registered broker-dealers that limit their futures-related activities to transactions involving certain types of investments can notice register as an FCM. These activities are:

• selling security futures products on contract markets or derivative transaction execution facilities; and
• effecting transactions in Total Return Asset Contracts ("TRAKRS") only with customers who are not either "qualified institutional buyers" as defined in Rule 144A, 17 C.F.R. Section 230.144A, or Chicago Mercantile Exchange members registered with the Commodity Futures Trading Commission ("CFTC") as floor brokers or floor traders.

To become registered as an FCM to sell security futures products, the broker-dealer can file a Notice Form 7-R. To become registered to effect TRAKRS transactions, the broker-dealer can file a Notice Form 7-R Limited Purpose FCM.