The two roles side by side
| FCM | Introducing broker | |
|---|---|---|
| Accepts customer funds and margin | Yes | No |
| Carries customer accounts | Yes | No, accounts are carried by the FCM |
| Solicits customers and orders | Yes | Yes |
| Registration | CFTC registration and NFA membership | CFTC registration and NFA membership |
| Capital requirements | Substantial, plus segregation of customer funds | Lower; none for guaranteed IBs |
Guaranteed vs independent introducing brokers
- Guaranteed IB (GIB): signs a guarantee agreement with one FCM, which takes responsibility for the IB's obligations. A GIB has no separate minimum capital requirement but can only introduce to that one FCM.
- Independent IB (IIB): meets its own minimum adjusted net capital requirement (currently $45,000 under CFTC and NFA rules) and files financial reports, which lets it introduce customers to more than one FCM.
Our guide to NFA introducing broker registration walks through the application itself.
Retail forex in the US
Retail off-exchange forex has extra rules. Firms that act as counterparty to retail forex customers register as retail foreign exchange dealers (RFEDs) or as FCMs approved for forex. An IB that introduces retail forex customers must also be approved as a forex firm with the NFA, and its salespeople must pass the forex exam. Leverage for retail forex is capped (50:1 on major currencies and 20:1 on others).
Associated persons: "What FCM or IB do you work for?"
The people who solicit customers for an FCM or IB are associated persons (APs). Each AP must be sponsored by a registered firm, pass the required proficiency exam (the Series 3, plus the Series 34 for retail forex), and be listed with the NFA. That's why NFA forms and background checks ask which FCM or IB you work for: an AP can't operate independently of a sponsoring firm.
FCM vs clearing broker vs introducing broker
In securities, the same split appears as clearing firms and introducing firms. Our guide on introducing broker vs clearing broker explains that version, and how responsibilities are divided in a clearing agreement.
Which should you become?
Most people who want to bring clients to the futures or forex markets start as an IB, often a guaranteed IB, because they don't need to hold customer money or meet FCM capital rules. Becoming an FCM is a large regulated business with significant capital, compliance and technology requirements. Outside the US, the same "introducing" idea applies, but the rules are different; see what an introducing broker is around the world.
This guide is general information, not legal advice. Check current CFTC and NFA rules before applying.
Frequently asked questions
Can an introducing broker hold customer money?
No. An introducing broker may not accept money, securities or property from customers to margin or guarantee trades. Customer funds go to the FCM or RFED.
What is the minimum capital for an independent introducing broker?
An independent IB must maintain minimum adjusted net capital, currently $45,000 under CFTC and NFA rules. A guaranteed IB relies on its FCM's guarantee instead.
Is an FCM the same as a broker-dealer?
No. FCMs work in futures and certain forex markets under the CFTC and NFA. Broker-dealers work in securities under the SEC and FINRA. Some firms are registered as both.
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