Commodities broker: the phrase covers three different businesses, and only one puts you on an exchange
Search for a commodities broker and you get exchange futures firms, CFD shops and spot metal dealers on the same page. They are regulated differently, hold your money differently, and only the first one gives you a contract anybody else can see.
“Commodities broker” is not a category of firm. It is a phrase that three unrelated businesses use about themselves, and the differences between them decide whether your position exists anywhere outside the firm’s own database.
One: the futures firm
A futures commission merchant takes your order for a contract listed on an exchange: crude on NYMEX, gold on COMEX, corn on CBOT. The contract is standardised, the price is the exchange’s, and your position is cleared by a clearing house that sits between you and whoever took the other side.
Registration is public. Every FCM appears in NFA’s BASIC database with its registration history and any disciplinary actions, and looking a firm up there takes about a minute. That is the single most useful thing you can do before funding an account, and it is the step people skip.
We set out what a futures account is and how it differs from a stock account in futures broker. The short version relevant here: it is a different regulator, a different rulebook, and a different set of protections.
Two: the CFD shop
The second kind sells you a contract for difference on the price of a commodity. There is no exchange, no clearing house and no delivery. You have an agreement with the firm, and the firm decides the price it quotes you.
This is a legitimate product with a real use, and it is also the one where the words on the marketing page look identical to the first kind. “Trade gold, oil and natural gas” describes both.
Two things separate them in practice. Leverage: exchange futures carry margin set by the exchange, while CFD leverage is set by the firm and by whichever regulator licenses it, which is why the same product appears at 1:20 in Europe and 1:500 offshore. We tabulate those caps in leverage limits by regulator. Counterparty: with a CFD, the firm’s solvency is your risk, and there is no clearing house standing in between.
Three: the metals dealer
The third sells physical bullion, or a claim on stored bullion, and calls the transaction brokerage. Some are storage businesses with a price list. Some are dealers whose spread between buy and sell is the entire cost and is rarely quoted as a percentage.
Nothing here is inherently wrong, and it is a completely different product from either of the first two. Someone comparing “commodities brokers” on commission alone can end up comparing an exchange fee against a bullion spread, which is a comparison with no meaning.
The line that applies to all three
SIPC states it plainly on its own page:
Cash held in connection with a commodities trade is not protected by SIPC
That is the sentence to carry away. A US brokerage account holding shares is covered up to $500,000 including $250,000 for cash. Move the same money into a commodities position and that cover does not follow it, whichever of the three firms you are dealing with.
It is not a warning about any particular company. It is how the line between securities and commodities regulation was drawn, and it surprises people every time a firm fails.
What to establish before funding
Which of the three you are actually opening. Ask whether the contract is exchange listed, and if so, on which exchange with which ticker. A firm that cannot answer in one sentence is the second or third kind.
Whether the firm appears in NFA BASIC, if it is US facing. The database is public and includes disciplinary history, which no marketing page will mention.
Where the money sits, and under which rulebook. Segregation requirements for futures customer funds are a different regime from securities, and offshore CFD entities may operate under neither.
What the all-in cost is per round turn, including exchange and clearing fees for the first kind, or the spread for the other two. Those numbers are not comparable across categories, so make sure you are comparing inside one.
What we checked, and what we didn’t
The SIPC line comes from SIPC’s own page, read on 17 August 2026. The description of the three business models comes from how these firms present themselves and from the regulatory structure each sits in.
We have not opened accounts with any commodities firm, tested execution, or compared spreads. We are also not naming firms here, because the useful work is the question set above rather than a list that goes stale.
Sources
- SIPC — what SIPC protects
- NFA — BASIC, the public registration and disciplinary database
- CFTC — intermediaries and registration