The FCM Business 2015: Overcoming Industry Adversity

Futures commission merchants (FCMs) are in the midst of radical change — adapting to new leverage constraints and tougher market conditions, which have challenged their business models over the past few years. This has led to a trickle of exits as a variety of factors have weighed down performance and expectations going forward.

TABB Group interviewed many of the top tier and up and coming FCMs in the first quarter of 2015, assessing the effect of regulation and capital on the economics of the business now versus 2014. Amidst the gloom, there were many reasons for positivity among both established players and challengers increasing market share. Overall, the outlook is still far more uncertain than at any point since the financial crisis.

Key points covered in the report include:

• The shifting competitive landscape for both over the counter (OTC) and futures businesses within FCMs.
• The effect of the increased regulatory burden and capital calculations on business models overall.
• Trends in client flows by region, and the future shape of the market.
• The changing approach to costs, technology and internal benchmarking at FCMs.
• The evolution of pricing models and the effect of the market environment on profitability.