<p>A Futures Commission Merchant (FCM) is a firm that acts as an intermediary between futures traders and exchanges. They facilitate trades, clear transactions, and manage risks.</p>

<h2>How It Works</h2>
<p>FCMs perform several key functions:</p>
<ul>
  <li><strong>Facilitate Trades:</strong> They execute trades on behalf of clients, either manually or via electronic platforms.</li>
  <li><strong>Clear Transactions:</strong> FCMs ensure that trades are settled and confirmed with the exchange. They also manage the transfer of funds and securities.</li>
  <li><strong>Manage Risks:</strong> FCMs are responsible for ensuring that their clients have sufficient margin in their accounts to cover potential losses. They also manage their own risk by hedging their positions.</li>
</ul>
<p>FCMs are regulated by the Commodity Futures Trading Commission (CFTC) in the U.S. They are required to maintain a minimum level of capital and are subject to regular audits.</p>

<h2>Why It Matters</h2>
<p>FCMs play a crucial role in the futures market. They provide access to trading for individual investors, manage risk, and facilitate the smooth operation of exchanges. For example, during the 2008 financial crisis, several FCMs stepped in to buy back positions from clients who were unable to meet margin calls, helping to stabilize the market.</p>