Quick Answer
Futures margin is a good-faith performance bond, not a loan or a partial payment. Only the carrying Futures Commission Merchant collects initial margin, issues maintenance and variation calls, and holds that money in segregation, separate from firm funds. An Introducing Broker collects and holds nothing, because it never touches customer money.
This section is the money test applied to margin: the firm that holds customer funds is the firm that collects the margin, and that firm is always the FCM.
Margin Is a Performance Bond the FCM Collects and Holds
Anchor what futures margin is before deciding who handles it.
- Margin (performance bond): futures margin is a good-faith performance bond, a security deposit that guarantees a trader will perform on open positions. It is not a partial payment toward buying the commodity and not a loan.
- The customer-facing firm must collect initial margin before or promptly after a position is opened and must issue maintenance (variation) margin calls when equity falls below the maintenance level.
- The firm that collects and holds margin is the carrying Futures Commission Merchant (FCM), because the FCM is the one that holds customer funds. Collected customer margin is held in segregation, kept separate from the firm's own money.
Think of it this way: margin is the customer's cash sitting as a security deposit. Only the firm that is allowed to hold customer cash can collect and hold that deposit. That firm is the FCM, so the FCM runs the whole margin process.
The IB Collects Nothing
The Introducing Broker's role stops at the order and the account.
- An Introducing Broker (IB) never accepts or holds customer margin. It may take the order and introduce the account, but the customer's money and the margin obligation flow to the carrying FCM, which collects, holds, and issues the calls.
Exam Tip: Gotchas
- The IB never collects or holds margin; the carrying FCM does. On any "who collects the margin deposit?" or "who holds customer funds?" question, the answer is the FCM, not the IB, because only the FCM accepts and custodies customer money (held in segregation). This is the same money test that decides which firm needs $1,000,000 in net capital.
- Margin is a performance bond, not a loan or a partial payment. A choice that calls futures margin "borrowing" or "financing part of the price" is describing securities margin, not futures.