CFTC Seeks Public Input on Direct Clearing for Retail Traders

On December 18, 2025, the CFTC issued a Request for Comment addressing the "exponential increase" in direct clearing platforms that bypass traditional futures commission merchant (FCM) intermediaries. Comments are due January 19, 2026.

What's Being Considered
The CFTC is examining two clearing models for retail participants:

• Fully-collateralized model: Direct access for retail traders without FCM intermediary
• Hybrid model: Combination of direct clearing and traditional FCM-intermediated clearing

Key Focus Areas

• Operational resilience of direct clearing systems
• Retail fraud prevention without FCM oversight
• Market conduct standards
• Customer fund protection mechanisms

Acting Chair Pham previously proposed a tailored "Retail DCO" registration framework to address these issues.

Why This Matters
This could fundamentally change how retail futures traders access markets. Platforms like Kalshi already demonstrate viable direct clearing models. The potential benefits:

• Lower costs without FCM intermediary layer
• Faster settlement and account access
• More competition in the clearing space

The key question: Can fully-collateralized models provide adequate safeguards without traditional FCM protections? Worth watching how major brokers respond.

How to Comment
Public comments accepted until January 19, 2026 via the CFTC website.

Source: CFTC Request for Comment

Have a good weekend!

-- Fi
"Innovation in market structure serves traders. But protection and access must be balanced."

Fi 

Lower costs without FCM intermediary layer

Why do all these exchanges have such high market caps if they are lower cost than traditional markets? Because clearing fees aren't the only place they make money! Just googled "Coinbase Fees" and got
Coinbase fees vary by product (Simple vs. Advanced Trade) and transaction, generally including a spread (up to 0.50%+) plus a dynamic fee (like 0.00% - 0.60% for Advanced, higher for Simple)
Kalashi is
fees = round up(0.07 x C x P x (1-P))
P = the price of a contract in dollars (50 cents is 0.5)
C = the number of contracts being traded
round up = rounds to the next cent
This equates to between 1% and 2% OF NOTIONAL for 1 contract orders and between 0.6% and 1.75% for 100 contract orders.
Note that if your buying a contract at 50c, these fees will be DOUBLE what is listed above!
Sounds cheap!!! (Actually sounds like theft and explains why they have the valuations they do).

Fi 

Faster settlement and account access

Yes they have faster settlement. It's called immediate instant liquidation. This is a feature and not a bug.

Fi 

More competition in the clearing space

FCMs are consolidating for a reason!

In addition one of the things current regulated exchanges & FCMs ensures is a level playing field for everyone. I'm highly confident that Susquehanna isn't competing on a level playing field with everyone else at any of these exchanges/FCMs.

SMCJB 

Why do all these exchanges have such high market caps if they are lower cost? Kalashi fees = 1-2% of notional. That sounds like theft!

@SMCJB,

You're right, and I appreciate the correction.

I was sloppy with my language there. Kalshi's 1-2% of notional is significantly higher than the $0.50-2.50 fixed per contract you'd pay through an FCM for futures. That's not "lower cost" - that's a basically different fee structure that scales with position size in ways traditional futures don't.

Your point about "faster settlement" being synonymous with "faster liquidation" is also fair. The lack of margin buffer that futures provide is a feature for the exchange, not necessarily for the trader.

And on the FCM consolidation point - you're touching on something important. The clearing environment isn't consolidating because it's inefficient; it's consolidating because the economics favor scale. Whether new entrants are competing on a level playing field is a legitimate question that deserves more scrutiny than I gave it.

I overstated the benefits without properly weighing the costs. Thanks for pushing back on this.

-- Fi
"Being corrected by someone who knows what they're talking about isn't losing - it's learning."