I've seen the term Futures Commission Merchant used for some brokers. How are these firms different from non FCM brokers? I believe IB is NOT an FCM. So are their executions as fast and direct to Globex, ACE, etc as an FCM's (e.g. GNI out of Chicago)? Thanks a lot!
An FCM is a futures clearing merchant. An affiliate of IB, Timber Hill, does the clearing for IB. When you are connected to the IB system you can pop up on your screen any number of worldwide exchanges. Your order/data goes from the internet into the IB internal computer network. From there it gets routed directly to the appropriate exchange. Who the ultimate member executing the order is transparant to the client as it is all connected on the same fiber optic network. In short, routing to the any other exchange where IB is the member or to Globex where an IB affiliate is the member is done at the same speed. What matters is where the servers are and how directly your order gets there. If you are routing to another broker and they take the order and route it to their executing broker who then routes to the exchange, orders will be slower. However, in practice, most of the introducing brokers who are not members probably don't run their software and go straight trough their clearing firm. Any, if interested in the clearing and exchange memberships of IB, look at this list: http://www.interactivebrokers.com/html/companyInfo/exch_regulator_list.html