Rumours of FCM model’s death have been greatly exaggerated

Recent months have brought a deluge of extraordinary ideas that, if implemented, would signal the demise of the traditional futures commission merchant, or FCM.

Exchange operators have proposed to disintermediate fundamental risk management practices and the risk mutualisation processes that are currently handled by FCMs, such as margin and default funding. Under the guise of real-time risk management, the proposals would direct algorithms to handle the potentially market-disruptive task of