Where Have All the BDs and FCMs Gone?

In a recent Brookings post, I show the dramatic decline in the number of broker-dealers and futures commission merchants. Broker-dealers are down about 30 percent in ten years, and FCMs are down about 60 percent. Given that regulatory demands have been increasing rapidly in recent years (as illustrated above), it is worth exploring the role that regulation is playing in this decline. The changing and challenging markets in which BDs and FCMs operate are clearly an important factor in the decline, but, especially for small firms, regulation can be the straw that breaks the camel’s back.