One of our most popular blog posts: a list of the top FCMs (based on customer funds held in segregation) has been updated with end of 2020 numbers. When doing research in selecting a futures commission merchant, or FCM, (i.e. custodian) to house your managed futures portfolio, it can be difficult to find a resource to assist in your decision-making process. The best tool the aiSource team has found is the data put together by CFTC that lists the all the FCMs each year based on total customer equity. Our 2020 ranking contains the top 40 FCMs based on customer funds as of November 30th, 2020. Please keep in mind that there is a total of 63 FCMs on the CFTC list. Here our Top 40 Rankings:
One major thing that stands out on this year’s FCM list is how much customer assets in seg have increased almost across the board at the FCMs. If you compare this year’s list to the FCM list from 2020 you’ll notice that some of the top FCMs have increased their customer assets by more than 50% and as high as 70% in some cases! What could be the reason for this dramatic rise? Inflation concerns that are driving up assets like bitcoin have also likely contributed to interest in commodities/futures. Furthermore, the covid-19 volatility that started in early 2020 (and never left) has caused investors to look to alternatives to generate uncorrelated returns. Regardless of the reason, this trend will be interesting to keep an eye on through the rest of this year.
The top nine FCMs on the list are institutional specific FCMs that do not house accounts smaller than $10M in size. FCMs that aiSource uses to house its clients’ accounts all fall between spots thirteen through thirty-six: R.J. O’Brien, (#13), StoneX (#20), Marex North American (#24), Phillip Capital (#28), Gain Capital Group (#34) and Dorman Trading (#36). R.J. O’Brien is the largest FCM that is available to all types of clients; as of November 30th, 2020, they had $4.7 billion in client funds. The FCM selection process is different based on the specific needs of each client, and our clients are divided amongst the six FCMs that we use.
Some FCMs that managed futures investors should stay away from are the ones that are not equipped to handle managed futures accounts. Time and time again, aiSource has seen novice investors get attracted by “low commissions,” and open an account with Interactive Brokers (#11) or TradeStation (#27) and face hardship when facilitating the needs of a managed account. Interactive Brokers and TradeStation are both great FCMs, but they are better suited for self-directed traders.
As an independent brokerage/investment advisory firm, aiSource has the ability to house its client accounts at any FCM. We are always looking to develop new FCM relationships and offer those to our clients, but based on our experience, R.J. O’Brien, StoneX, Marex, Phillip Capital, Gain Capital and Dorman Trading are some of the best firms at handling managed futures investors.