Futures: Different Types Of Brokers???

Discussion in 'Index Futures' started by Aranha, Sep 30, 2002.

  1. Aranha

    Aranha

    Dear all,

    Does anybody know the difference among:
    - Futures Commission Merchant (FCM)
    - Introducing Broker (IB)
    - FCMs with Guaranteed IBs
    - IBs with FCM Guarantor
    - Commodity Pool Operator (CPO)

    regards

    Raphael
     
  2. FCM is the member who clears your trade

    IBs act as retail sales force for FCM.

    IB's must put up bond money to cover any customer losses which can't be recovered from the customer. Many IBs do not have the capital to put up this bond (I forget offhand how much it is) so the FCM will guarantee the IB.

    In my opinion, it is an error to say one is better than the other, for reasons too detailed to go into.

    CPO is a disclosure that the firm is authorized to trade pooled money.

    I guess you already know the abbrev
    FCM Futures Commission Merchant
    IB Introducing Broker
    CPO Commodity Pool Operator
     
  3. MarkHyman

    MarkHyman Advanced Futures

    Introducing Broker (IB)

    2 Classifications of Introducing Brokers


    (1)Independent Introducing Broker (IIB)
    * They put up $30,000 Capital
    * They have the ability to work with many FCM,s

    (2)Guaranteed Introducing Broker (GIB)
    *They do not put up Capital
    *They usually can only work with the one FCM that is
    Guaranting them
     
  4. Aranha

    Aranha

    So,

    it would be safer to open an account with a firm that it's either FCMs with Guaranteed IBs or IBs with FCM Guarantor , than with a firm that is solely an IB???

    Regards

    Raphael