Trade in options and futures brokerage
Retrieved from " https: It is a mark of distinction for an FCM to be a clearing member. A trading pit is an area of floor, usually round with concentric steps leading down into the center. For this reason, a futures broker needs to team up with an FCM in order to provide order execution services to its customers.
The answer is the futures exchange. Floor trading is conducted in the pits of a commodity exchange via open outcry. The answer lies in the margin deposit that every other futures trader must make before trading any contract.
Views Read Edit View history. Ever since the s, the majority of commodity contracts traded are financial derivatives with financial underlying assets such as stock indexes and currencies. The clearing corporation's elimination of such counterparty credit risk provides a great benefit to the futures and options markets.
The primary purpose of the NFA is to ensure, through self-regulation, high standards of professional conduct and financial responsibility on the part of the individuals and organizations that are its members: This is the commodity equivalent to a registered representative. The clearing corporation guarantees the transaction.
Does A sacrifice her profit? When executing trades on behalf of a client in exchange for a commission trade in options and futures brokerage is acting in the role of a broker. One may wonder how the clearing corporation does this. Matching these two together so that a trade can be consummated requires the participation of a host of individuals and organizations, each having specific roles, which in the aggregate make the futures market the efficient mechanism that it is today.