Release: #4048-97

For Release: September 3, 1997

CFTC PROPOSES AMENDING RULES GOVERNING RISK DISCLOSURE OBLIGATIONS OF FCMs & IBs

The Commodity Futures Trading Commission (Commission) today approved for publication in the Federal Register proposed amendments to its rules governing the risk disclosure obligations of futures commission merchants (FCMs) and introducing brokers (IBs). If adopted, the proposed rule amendments are expected to speed the account opening process for the categories of customers identified in the rule and reduce the administrative burdens on FCMs and IBs. In her remarks, Chairperson Born described the Commission's action on the proposal as representing "another step in a series of initiatives that the Commission has undertaken to streamline regulatory requirements and to reduce regulatory burdens." The proposed rule amendments will be published for a sixty-day public comment period.

As proposed, the rule amendments would eliminate requirements set forth in Commission rules 1.55, 1.65, 30.6, 33.7 and 190.10(c) for standardized risk disclosures and customer acknowledgment of such disclosures in the context of accounts opened for specified categories of financially sophisticated customers. The categories of customers to whom the proposed relief would apply include securities broker-dealers, banks, insurance companies and other regulated financial intermediaries; investment companies with total assets in excess of $5,000,000; employee benefit plans subject to ERISA with total assets exceeding $5,000,000 or whose investments are managed by specified types of investment professionals; corporations, partnerships, trusts and other entities with total assets exceeding $10,000,000 or a net worth of at least $1,000,000; and natural persons with totals assets exceeding $10,000,000. The proposal makes clear that FCMs and IBs must still provide qualifying customers with "such disclosure as is material in the circumstances."

Comments should be sent to Jean A. Webb, Secretary of the Commission, Commodity Futures Trading Commission, 1155 21st Street, N.W., Washington D.C. 20581. In addition, comments may be sent by facsimile transmission to (202) 418-5221, or by electronic mail to secretary@cftc.gov. Reference should be made to "FCM/IB Risk Disclosure Amendments."