Futures commission merchant

A reader who opens a prediction-market tab inside a brokerage app usually believes they have an account with the exchange whose name is on the contract. They do not. Their account is with a broker of a specific legal kind, and that broker, not the exchange, is who holds their money, checked their identity and sends their statements.

How it works

Two tests, and both must be met. The Commodity Exchange Act defines a futures commission merchant, at 7 U.S.C. 1a(28), as a person soliciting or accepting orders for futures, swaps and a few related instruments who, in connection with those orders, "accepts any money, securities, or property" to margin, guarantee or secure the resulting trades — or anyone registered with the Commission as one. The second half is what separates it from its neighbour. An introducing broker, at 1a(31), also solicits and accepts orders but "does not accept any money": it passes you to an FCM that does. So an app can take your order without ever holding your dollars, and which of the two it is decides whose balance sheet your cash sits near.

Registration is compulsory, and so is NFA membership. 7 U.S.C. 6d(a)(1) makes it unlawful to act as an FCM without being registered with the CFTC. The Commission's staff FAQ of 30 June 2025 adds that every FCM must also be a member of the National Futures Association, which processes the registration on the Commission's behalf.

Your money is yours, on paper, and kept apart from the firm's. Section 6d(a)(2) requires an FCM to treat customer money "as belonging to such customer", separately accounted for and not commingled with the firm's own funds or used for anyone else's trades. Customers' money can share one account with other customers' money; what it may not share is the firm's balance sheet. The same FAQ describes the daily statements FCMs file to show they are meeting that requirement.

That protection is not insurance. The FAQ is explicit on this: the bankruptcy protections for FCM customers "do not include account insurance of the type provided by the Securities Investor Protection Corporation for securities accounts", and if the money turns out to be short, customers share what is left on a pro-rata basis. A reader used to a stock brokerage should not carry the SIPC assumption across the menu to the tab next to it.

Where it sits on an event exchange

The same FAQ names "event markets operated by designated contract markets" among the markets FCMs serve, and describes a clearing FCM as guaranteeing its customers' obligations to the clearing house. The catalogue's US venues split three ways on how much of that applies to you.

• Always through one. The ForecastEx card records that its rulebook bars individuals from direct membership, and lists three FCM members as of 19 September 2026: Interactive Brokers, Robinhood and Advantage Futures.
• Is one. Robinhood Prediction Markets is not an exchange at all. Its card records Robinhood Derivatives, LLC as a CFTC-registered FCM, routing to KalshiEX, ForecastEx or Rothera Exchange and Clearing.
• Either way. Kalshi takes individuals as direct members under its own member agreement, and is also reached through brokers; its card records that customers coming through an FCM may be charged different fees by that FCM. The Polymarket US card records an amended designation order of 24 November 2025 that removed a clause barring FCMs from carrying customer accounts there.

Why it matters here

It changes the fee you pay, and the fee table you should read. The exchange's schedule is the floor on a brokered route, not the total. The US event-contract venues comparison records Robinhood adding a commission on top of the exchange fee; the ForecastEx card records its rulebook sending the interest coupon to members, which leaves how much reaches you to the broker. Both numbers belong to the FCM, so the question goes to the FCM, in writing.

It decides who your problems go to. A delayed withdrawal, a rejected identity document, a missing statement: on a brokered route each of these is the FCM's, because it opened the account and holds the cash. The identity rule itself, 31 CFR 1026.220, is written for FCMs and introducing brokers — see what you have to prove to trade. Tax paperwork follows the same line; who sends you a tax form sets out which party sends what.

It does not decide how your contract settles. The FCM routes the order; the exchange's filed rulebook resolves it. Robinhood's card records no resolution source of its own for exactly this reason. Two readers holding the same contract through two different brokers hold the same contract, with the same settlement source and the same outcome.

It is not the exchange's registration. A designated contract market is a different CFTC status, held by a different legal entity. An app can truthfully say it is "CFTC-registered" because its FCM is, while the exchange it routes to carries the designation. Reading one for the other is how a reader ends up certain that a brand is an exchange.

It is checkable in a minute. NFA's free BASIC search takes a firm's name or NFA ID and returns its background record. Search the legal name in the app's disclosure — Robinhood Derivatives, LLC, not Robinhood — because that is the entity the rules attach to, and the one that files the daily segregation statements.