Futures Brokers Key Terms

Secure your future money with knowledge of future brokers

By Meredith Fagioli

Future brokers are the people that work in the area of the stock market that focus on future deliveries of commodities. These can be things like corn, cattle, crude oil or currencies. If you are looking to trade in this competitive market or are looking to hire a futures broker to handle your transactions for you, a little knowledge of the area in general is a good idea. Take some time to focus on a few key terms before you go investing money from your budget.

Broker

A broker is the person who is paid a fee for buying or selling orders for their customer. There are three types of brokers in the futures markets: Floor Brokers, Associated Persons and the Futures Commission Merchant.
Try: Take a visit to MF Global Ltd to read more on brokers and other basic futures terminology.

Futures commission merchant

A futures commission merchant, or FCM, is a person or a group that either solicits or takes orders to buy or sell futures while taking money or assets from customers in direct relation to the orders. To be a futures commission merchant, you must be registered with the Commodity Futures Trading Commission.
Try: At RJO Futures, you can get additional information on futures commission merchants and other future brokers key terms.

Commodity Futures Trading Commission

The Commodity Futures Trading Commission, or CFTC, is an agency that was formed in 1974. The CFTC watches over the futures and options on all U.S. futures markets. The CFTS is an independent commission that is made up of five Presidential nominated members who were subject to Senate confirmation.
Try: Go directly to the source, the U.S. Commodity Futures Trading Commission, for more information on this key term.

Spread

The spread is the difference in price between two closely related markets or futures commodities.
Try: Read more about spread at the University of Missouri site that offers some free commodity futures terminology.

Associated person

The associated person, or AP, is the person that takes or solicits orders on behalf of the futures commission merchant. They can also supervise people who are taking or soliciting orders.
Try: At the website for the Texas Cooperative Extension at the Texas A&M University System, you can find additional information on associated person.

Floor broker

The floor broker, or pit broker, is the person who is in charge of executing the orders on the floor of the exchange. The reason they are also called pit brokers is because of the area where the brokers stand to execute orders. It resembles a pit because there are steps that lead down into it.
Try: At the Center for Futures Education, you can read more about the role of the floor broker, as well as many other futures broker key terms.