Regulated entities in the U.S. futures markets

As Architect prepares to launch the American Innovation Exchange (AI Exchange) for U.S. regulated futures on AI Compute, we thought it was important to review the four core categories within the U.S. futures markets. Two of the regulated entities are customer facing — an Introducing Broker (IB) and the Futures Commission Merchant (FCM). Futures market infrastructure also includes a Designated Contract Market (DCM) where a trade is executed and a Derivatives Clearing Organization (DCO) that settles the trades. All four are overseen by the Commodity Futures Trading Commission (CFTC), the federal regulator, with the National Futures Association (NFA) acting as the industry's self-regulatory body.

Introducing Broker (IB)

Let's start with the IB, who is the customer-facing salesperson of the futures world. An IB solicits and accepts orders but is not permitted to hold customer money or margin. Every account it opens must be "introduced" to an FCM that carries (holds) the funds. Think of the IB as origination and the client relationship without custody. IBs register with the CFTC and are NFA members.

Futures Commission Merchant (FCM)

The FCM is the entity that actually holds the money. It carries customer accounts, collects, holds and posts margin, may extend credit, and routes orders to the exchange for execution. Critically, FCMs must keep customer funds segregated from their own, and they are the clearing member that stands between the customer and the clearinghouse. If you have a futures account, your money sits with an FCM.

Designated Contract Market (DCM)

The DCM is the exchange itself — the licensed venue where futures (and options) contracts are listed and traded (for example CME or ICE Futures U.S.). A DCM sets contract specifications, provides the trading platform and order matching, and self-regulates trading activity on its market. It is where price discovery happens and where the trade executes.

Architect is preparing to operate a DCM, AI Exchange, which will list futures on AI commodities starting with AI Compute.

Derivatives Clearing Organization (DCO)

The DCO is the clearinghouse. After a trade executes on the DCM, the DCO steps in as central counterparty. The DCO becomes a buyer to every seller and seller to every buyer. It settles the trade, collects margin from clearing members, nets positions, and guarantees performance so neither side bears the other's default risk. This is what removes counterparty credit risk from the market.

How the order flows

A customer places an order via a user interface provided by a third-party independent software vendor, an IB, or an FCM. The order identifies the customer's FCM so that the DCM and DCO know which FCM is responsible for clearing and settling the customer's trading activity. The order routes to the DCM for execution. Once executed, the DCM reports the trade to the DCO and the resulting trade is cleared and novated to the DCO — this is when the DCO becomes the buyer to each seller and the seller to each buyer. The FCM is the counterparty to the DCO for all its underlying customers and accordingly acts as their guarantor. Overseeing all of them is the CFTC as the federal regulator, with the NFA registering and auditing IBs and FCMs.

Conclusion

Together, the IB, FCM, DCM, and DCO form a chain of custody, execution, and risk management that has underpinned U.S. futures markets for decades. Each layer is purpose-built, regulated, and transparent, which is precisely what makes U.S. futures markets some of the most resilient and trusted in the world.

Architect is pleased to be entering this landscape with the launch of AI Exchange, our DCM for U.S. regulated futures on AI Compute. We're excited to bring the same rigor and infrastructure that has long supported traditional commodities and financial futures to this new asset class, and we look forward to working alongside IBs, FCMs, and our DCO partner to build a market designed for the AI economy.