Follow the Bouncing Money with FCMs

[Qiman 10]

I find that some future's traders do not fully understand the complexity of where their margin is actually being held, and by whom. This is understandable, and yet dangerous, in these times of moral hazard.

 

The following flowchart might be useful to some traders. What is especially important is to realize that many FCMs are not clearing members of all the exchanges, and thus have to use other FCMs who do have clearing authority. This can expose one to risks from other firms that one has never even heard of before!

 

http://www.futuresmag.com/2012/11/01/spotting-broker-red-flags?eNL=50898ff0140ba0d945000300&_LID=93114300&page=2

 

Once you know which firms you are actually dealing with, it is wise to look up any regulatory actions which have been taken, etc. This can be done at the BASIC site, which contains Commodity Futures Trading Commission (CFTC) registration and NFA membership information and futures-related regulatory and non-regulatory actions contributed by NFA, the CFTC and the U.S. futures exchanges.

 

http://www.nfa.futures.org/basicnet/

[GlassOnion 12]

Qiuman, very useful. Thank You.