IMRA flags steep decline in FCMs, endorses analysis of capacity and concentration risks

The IMRA Market Structure subcommittee presented analysis showing substantial consolidation among Futures Commission Merchants (FCMs) over the past two decades and flagged structural concentration risks.

Ashwini (workstream lead) told the committee the workstream assembled public regulatory filings to build a database and found a 69% decline in the total number of FCMs and a 58% decline in an important segment of FCMs that hold client funds intended for futures trading. The analysis showed aggregate client margin holdings grew sharply (the workstream cited a historical figure of more than $60 billion in earlier periods vs. more than $500 billion in client margin held in 2023). The report also found that the top 10 FCMs now account for more than 80% of customer funds and that many remaining FCMs are affiliated with banks or broker-dealers.

Workstream members warned that concentration may make porting client positions during an FCM default more challenging and that newly proposed international capital measures (for example, elements of the Basel 3 endgame) could affect clearing-member capacity and incentives to offer client-clearing services. Some IMRA members cautioned the analysis documents correlation rather than definitive causation for consolidation, and the workstream recommended further analysis to assess how new mandates or reforms would affect capacity and market structure.

The committee voted to adopt the FCM capacity and concentration analysis and to submit it to the Commission: roll-call results announced on the record were 24 yes, 2 no, and 1 abstention.

What happens next: the analysis will be transmitted to CFTC staff for consideration; the subcommittee recommended additional study of regulatory impacts and potential policy options to address concentration and porting risks.