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Data Spotlight - US futures brokers see large gains in customer funds

Total FCM customer funds hit a record level of $370 billion in March

17 June 2022

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Futures brokers in the US are reporting large increases in the level of customer funds held in futures accounts. Total customer funds hit a record level of $370 billion in March and continued at a high level in April, and most brokers are reporting double-digit increases in customer funds compared to a year ago.

At the same time, the number of futures brokers – also known as futures commission merchants or FCMs – continues to decline. According to the US Commodity Futures Trading Commission, there were 47 FCMs holding customer money as of April, down from 51 a year ago and 53 two years ago.

This spring was not the first time that the industry saw a jump in customer funds balances. The $300 billion threshold was first broken in March 2020, when total funds in futures accounts shot up to $318 billion from $214 billion the month before. In that case, the sudden increase was driven primarily due to the volatility brought by the onset of the COVID-19 pandemic, which caused the clearinghouses to increase their margin requirements.

The CFTC does not disclose a breakdown of customer funds by asset class or market segment, but it is worth noting that the increase over the last several months took place amid heightened volatility in interest rates, equities and commodity markets.

These amounts include all funds deposited by customers for the trading of futures. This includes funds in both "segregated" accounts, which are used for the purpose of trading on US futures exchanges, and "secured" accounts, also known as Part 30 accounts, which are used for trading on exchanges outside the US. These amounts do not include funds held at futures brokers outside the US or funds used for the trading of interest rate swaps or other OTC derivatives.

Drilling down to the level of individual FCMs, the table below shows the 22 bank-owned FCMs ranked by total customer funds, with a breakdown by type of account: domestic futures, foreign futures, and cleared swaps.

Out of the 22 banks listed in the FCM Tracker for April 2022, 19 exhibited a positive increase in customer funds in futures accounts year-over-year. Only three banks exhibited a decrease in customer funds.

J.P. Morgan Securities had the most customer funds in April, with a total of $76.2 billion across futures, Part 30 and swaps accounts and a 7.2% year-over-year increase. HSBC Securities USA had the largest percentage increase in customer funds compared to a year ago, with an increase of 98.9% to $9.04 billion. Credit Suisse Securities was the bank that exhibited the most significant decline, with a 82.8% year-over-year drop to $4.09 billion in customer funds.

Out of the 26 non-banks listed in the FCM Tracker for April 2022, 20 exhibited an increase in customer funds from a year ago. Only six non-banks showed a decrease in customer funds. ADM Investor Services was the non-bank with the most customer funds in April, with a total of $9.71 billion across futures, Part 30 and swaps accounts and a 50.1% year-over-year increase. Among non-banks with over $1 billion in customer funds, Wedbush Securities displayed the greatest growth with an 117.4% year-over-year increase to $4.36 billion.

For more data on FCM financial reporting, please visit the FIA FCM Tracker or contact data@fia.org.

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