TABB: FCM Business On Rebound, But Pain From Unaddressed MF Global Issues Linger

There was a time when the Futures Commission Merchant (FCM) business flourished. In 2008, for instance, when interest income represented nearly 25% of revenue for the derivatives brokerage industry there were 154 FCMs, the vast majority independent. Profitability was relatively high and regulation accommodative. Fast forward to 2016 when interest income is nearly extinct and now only 70 FCMs serve the industry. In a world where nearly three-quarters of all assets are managed by large banks, a decided shift has occurred. In eight years the industry has faced many challenges, some of which have not been fully addressed. But the…