Financing and Clearing Services
Any institution or individual who wishes to trade futures through a managed futures program on their behalf or on their own needs to establish a futures account at a Futures Commission Merchant (FCM). MFI deals with only NFA member firms. These firms must be registered with the Commodity Futures Trading Commission (CFTC) as Futures Commission Merchants (FCMs) and are members of the National Futures Association (NFA). These financial institutions charge the investor a commission for providing these services. MFI receives no commission or rebate of any kind from these financial institutions.
Margin – Good Faith Deposit
Each futures account is funded through margin. A margin account is one in which an investor or trader deposits a percentage of the value of the contract. Futures markets are highly leveraged. As a result, a trader will typically be required to deposit ten percent or less of the value of the contract. For example, the crude oil margin may be $2,400 per contract. With crude oil trading at $50.00, this would represent a total dollar value of $50,000.00 per contract ( $50 per barrel x 1,000 barrels per contract). This equates to 4.8 percent of the value of the contract (2,400/50,000).