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PM Derivatives LLC, a subsidiary of Polymarket, has officially secured approval from the National Futures Association (NFA) to operate as a Futures Commission Merchant (FCM). For Polymarket, this milestone brings it one step closer to expanding its U.S. prediction market business by independently processing derivatives.
However, the Commodity Futures Trading Commission (CFTC) must first sign off on the NFA approval. That sign-off would give PM Derivatives LLC full regulatory clearance. Only then can the company begin brokerage activities.
CFTC approval required
The NFA approval shows that PM Derivatives satisfies the self-regulatory requirements to become registered as an FCM. However, the company isn’t yet authorized to begin carrying customer accounts. Notably, it requires additional approval from the CFTC. It cannot start operating as a registered futures broker until then.
Opening new doors for Polymarket
The recent NFA approval brings Polymarket one step closer to being able to independently process derivatives within the U.S. Polymarket has already laid the groundwork with its three-part corporate infrastructure: QCX LLC, the exchange; QC Clearing LLC, the clearinghouse; and PM Derivatives LLC, the broker. QCX LLC now operates as Polymarket US.
Polymarket acquired QCX LLC and QC Clearing LLC in 2025 for $112 million. QCX, now Polymarket US, is already registered with the CFTC as a designated contract market. Additionally, QC Clearing LLC is also registered as a derivatives clearing organization.
If PM Derivatives gets the final nod from the CFTC, Polymarket could intermediate customer orders and hold customer funds. Polymarket would not have to rely solely on its exchange and clearing operations.
An FCM is the intermediary between customers and the derivatives market. It accepts customer orders and funds while handling account-level operations.
For Polymarket, this means it could control more of the customer relationship. Moreover, it could simplify onboarding, order routing, and funding. Most importantly, Polymarket could retain more of the economics of each trade.
PM Derivatives said that it would operate on a fully collateralized basis. This means customers would fund positions in full when placing trades. They would not use leveraged margin. That approach is in line with Polymarket Clearing’s current authorization to clear fully collateralized futures, options on futures, and swaps.
Why brokerage matters in the prediction market industry
Prediction markets are moving beyond standalone trading platforms. Distribution has become a key competitive advantage.
For example, Kalshi contracts are available through various outside brokerages, including Robinhood. As such, the prediction market gets access to customers with funded investment accounts.
As a result, Kalshi registers higher trading activity than Polymarket. Artemis data cited by FinanceFeeds shows that Kalshi captured $9.6 billion of approximately $10 billion in weekly non-sports prediction market volume during one September period. The same data shows that Polymarket captured only $344.2 million in that period.
For Polymarket, an affiliated FCM (PM Derivatives) is a way for it to narrow the infrastructure gap with Kalshi. It is also a way for Polymarket to boost its trade volumes.
Importance of regulatory risk
PM Derivatives has secured NFA approval. At the same time, Polymarket is under active investigation by the CFTC for its compliance and marketing practices. Specifically, the CFTC is assessing whether Polymarket complied with the terms of the 2022 settlement. That settlement barred Polymarket from offering non-compliant event contracts in the United States.
The investigation will also look into Polymarket’s offshore U.S. access and marketing practices. It will include certain aspects of Polymarket’s newer domestic operation. The 2022 settlement terms also included a $1.4 million civil penalty.
Beyond this one investigation, prediction markets in general are facing stronger headwinds from state authorities. Across the U.S., authorities are challenging the platforms’ authority to operate without state licensing. Meanwhile, prediction markets argue they are under the sole jurisdiction of the CFTC.
