Futures Broker: What You're Signing Up For
A futures account is not a stock account with different tickers. Different regulator, different protection, and SIPC does not cover it. What to check before you fund one.
Most people arrive at futures from stocks, and carry an assumption with them: that a brokerage account is a brokerage account, and the protections they’ve read about apply. In the US they don’t, and the difference is written down by the protection scheme itself.
SIPC does not cover futures
SIPC is the scheme behind US securities accounts, worth $500,000 per customer including a $250,000 limit for cash. Its own page is explicit about the edge of that cover: «SIPC does not protect commodity futures contracts (unless held in a special portfolio margining account)», and «cash held in connection with a commodities trade is not protected by SIPC.»
So the number most US traders have in mind does not apply to the account they use for futures. What replaces it is a different regime: futures brokers hold customer money in segregated accounts under the Commodity Exchange Act, supervised by the CFTC rather than the SEC, and that segregation is the protection. It’s a real one, and it’s a different one, with no insured cap behind it.
If you trade both, you likely hold two accounts under one login, protected two different ways, and only one of them is the way you think.
Registration is checkable in about a minute
A US futures broker is a Futures Commission Merchant, and an FCM must register with the CFTC and belong to the National Futures Association. Introducing brokers, who take your order and pass it to an FCM, register separately.
You can verify any of them at NFA BASIC (nfa.futures.org/basicnet/) by firm name
or NFA ID. The record shows registration status, categories held, and disciplinary
history, which is the part worth reading. A firm with a clean marketing site and a
list of regulatory actions in BASIC is a common combination.
Search the brokerage entity, not the brand. If a platform is marketed under one name and clears through another, the second one is the FCM holding your money, and that is the record you want.
Prop firms are not futures brokers
This trips up a lot of people, because prop firms advertise the same instruments and much bigger numbers.
A futures broker takes your money, holds it segregated, and routes your orders to an exchange. A prop firm takes an evaluation fee and gives you a simulated account; your orders reach the firm’s own system. MyFundedFutures discloses that 43.41% of participants reach its simulated funded stage, 28.56% of those are ever paid, and 1.01% reach live capital, which is the clearest published picture of what that product delivers. Our writeups on futures prop trading firms and prop firm challenges go through the mechanics.
Neither model is a scam and they answer different questions. But the account types carry nothing in common: no segregation, no CFTC oversight of your balance, and no exchange on the other side of your fill.
The tell is in the disclaimers. CFTC Rule 4.41 requires hypothetical performance to be labelled, and prop firms comply, usually in small print under a headline about firm capital. If a page selling you «funded» trading carries a hypothetical performance disclosure, the account is simulated, whatever the button says.
What to check before funding
Which entity clears your trades. The FCM holding the money, named in the account agreement, verified in BASIC.
Margin, and whose margin it is. Exchanges set initial and maintenance margin per contract, and brokers may require more. The exchange number is public; the broker’s add-on is the one that decides whether you get liquidated on a normal move. Ask for day-trading margin and overnight margin separately, because they are usually not the same number.
Fees per side, per contract. Commission, exchange fees, NFA fees and platform fees are billed separately, and a quoted «$0.25» rarely means the total. Ask for the all-in per-contract, round turn.
Data subscriptions. Real-time CME data is a monthly cost, charged per exchange and often per device class. It is small, it is separate, and it surprises people in month two.
Hours. Futures sessions don’t match equity hours and vary by product; our futures trading hours page has the current schedule by contract.
Outside the US
The FCM/NFA structure is American. Elsewhere the intermediary sits under the local regulator, and the compensation position differs by jurisdiction rather than by product; UK clients of a failed FSCS-covered firm can claim up to £85,000 per person per firm. What stays constant is the question: which licensed entity holds the money, and what happens to it if that entity fails.
If the answer is an offshore company with no compensation scheme, then the leverage is higher for the same reason the protection is absent.
Sources
- SIPC — what SIPC protects, and what it does not
- NFA BASIC — registration and disciplinary records
- CFTC — Rule 4.41, hypothetical performance results