What Is a DCM vs FCM in the World of Prediction Markets? Educational Guide
If you’ve been following the rise of Kalshi and other prediction market apps, you may have heard the terms DCM and FCM thrown around.
Prediction markets and derivatives trading in the U.S. involve these two key types of regulated entities. While DCMs and FCMs work closely together, their roles are distinct. RotoGrinders explains the difference so you know what type of platform you’re interacting with and how more exchanges may become available through this model.
What Is a DCM?
A Designated Contract Market (DCM) is a regulated exchange where trading in futures, options, or prediction contracts occurs. DCMs create and maintain the marketplace, set trading rules, and ensure compliance with Commodity Futures Trading Commission (CFTC) regulations.
What Is an FCM?
A Futures Commission Merchant (FCM) is an intermediary that allows customers to access DCMs. FCMs manage customer accounts, handle margin requirements, and execute trades on behalf of their clients. They also ensure customer funds are handled safely under strict regulatory standards.
Examples of DCMs and FCMs
Most users are familiar with Kalshi at this point. Kalshi is a primary example of a DCM, and it works with several FCM partners, including Robinhood and PrizePicks Predict.
Another example of a DCM–FCM relationship is Crypto.com and Fanatics Markets. In this setup, Crypto.com operates as the DCM, while Fanatics Markets serves as the FCM, acting as a middleman between the exchange and end users.
Key Differences Between DCMs and FCMs
See the key differences between DCMs and FCMs:
| ✅ Feature | 👑 DCM | 🤝 FCM |
|---|---|---|
| Role | The exchange where trading occurs | Intermediary connecting clients to the exchange |
| Primary Function | Lists contracts, enforces rules, ensures fair trading | Manages customer accounts, margin, and trade execution |
| Examples | Kalshi, Crypto.com | Robinhood, PrizePicks Predict, Fanatics Markets |
| Regulator | CFTC | CFTC |
| Think of it as | The marketplace | The gateway to the marketplace |