For Release: August 21, 2001
CFTC Proposes More Flexible Regulations for Intermediaries
Washington, D.C. -- The Commodity Futures Trading Commission (CFTC) has proposed revised rules governing intermediaries of commodity interest transactions. The proposal is similar to a set of final rules that were issued by the CFTC last December. Those earlier rules were withdrawn following enactment of the Commodity Futures Modernization Act of 2000 (CFMA) and the CFTC has now amended the rules to comport with the requirements and terminology of the CFMA.
The proposal includes changing the definition of “principal” of a firm by reducing the number of officers that will be considered principals required to be listed as such with the CFTC; permitting those seeking to register as introducing brokers (IBs) and who have raised their own capital to file an unaudited financial report indicating satisfaction of the minimum financial requirements; streamlining the permissible process for opening new customer accounts by permitting certain disclosures to be included in a customer agreement and that can be acknowledged by a customer through a "single signature;" permitting intermediaries that have obtained customer consent to deliver transaction and account statements electronically; allowing customers greater flexibility with respect to closing out offsetting positions; providing greater flexibility in ethics training by replacing the current prescriptive rule with a Statement of Acceptable Practices; and giving retail customers broader access to registered derivatives transaction execution facilities (DTFs) than provided under the CFMA by permitting retail customers to trade on a registered DTF through a commodity trading advisor with at least $25 million in assets under management.
Acting Chairman James E. Newsome had this to say about the proposed rules: “While it was important for us to move forward in the implementation process by re-proposing the rules promulgated last year, this is by no means an end to our effort with respect to intermediary relief. I expect that we will undertake a comprehensive review of the regulations affecting intermediaries, comparable to what was done on the exchange side, in the very near future.”
The proposed new rules and rule amendments are being published in the Federal Register for a 15-day comment period. Copies of these documents can be obtained by contacting the Office of the Secretariat, Three Lafayette Centre, 1155, 21st Street, N.W., Washington, DC 20581, (202) 418-5100 or by accessing the Commodity Futures Trading Commission website.