CFTC approves final rule requiring recording of oral communications

Abstract

Purpose

This paper aims to address amendments to the Commodity Futures Trading Commission (CFTC) recordkeeping rules that will require certain market participants to maintain records of all oral communications leading to the execution of a “commodity interest” transaction that are communicated by telephone, voicemail or mobile device. The paper also seeks to address the CFTC's revised rules expanding the current recordkeeping requirements to include written communications related to swap transactions.

Design/methodology/approach

The paper reviews the revised rules, adopting release and industry commentary and explains how the requirements of CFTC Regulations 1.31 and 1.35 will be applied to futures commission merchants (FCMs), certain introducing brokers (IBs), certain members of a designated contract market (DCM) or swap execution facility (SEF), and retail forex dealers (RFEDs).

Findings

FCMs, certain IBs, certain members of a DCM or SEF, and RFEDs must comply with the oral communications recordkeeping requirements no later than December 21, 2013. FCMs, IBs, all members of a DCM or SEF, and RFEDs must comply with the CFTC's revised recordkeeping rules for written communications no later than February 19, 2013.

Practical implications

All FCMs, IBs, members of a DCM or SEF, and RFEDs impacted by the rule should prepare to maintain records of all covered written and oral communications. If it is technologically or economically impractical for a market participant to comply with the requirement to record all oral communications that lead to a commodity interest transaction by the compliance date, the participant should request an alternative compliance schedule.

Originality/value

This paper provides practical guidance from experienced financial services lawyers.

Citation

Rosenzweig, K.M., Foley, K.M. and Brockway, B.J. (2013), "CFTC approves final rule requiring recording of oral communications", Journal of Investment Compliance, Vol. 14 No. 1, pp. 47-49. https://doi.org/10.1108/15285811311321260