U.S. Futures Markets
Market Structure
U.S. futures trading occurs on designated contract markets (DCMs), such as venues within CME Group and ICE. The Commodity Futures Trading Commission (CFTC) is the federal regulator created by the Commodity Exchange Act. The National Futures Association (NFA) is a self-regulatory organization with membership and conduct rules. Exchanges set contract specifications and trading rules; they do not replace CFTC oversight.
Market participants include futures commission merchants (FCMs), which handle customer funds and orders; introducing brokers (IBs), which solicit customers but do not hold funds; associated persons (APs), who solicit or supervise; and commodity trading advisors (CTAs) and commodity pool operators (CPOs). The clearinghouse settles trades and collects margin from clearing members.
Traps
Candidates confuse the CFTC with the NFA: the CFTC is a government agency; the NFA is an industry SRO. Exchanges do not guarantee customer suitability or act as regulators. An IB cannot accept customer funds for trading; an FCM can. Registration categories and permitted activities are frequently tested.
Rule of Thumb
If a firm solicits customers and accepts funds for futures trading, it generally must be registered as an FCM and be an NFA member. Customer funds must be segregated from firm funds.