Release: #4575-01
For Release: October 18, 2001

CFTC Adopts More Flexible Regulations for Intermediaries

Washington, D.C. -- The Commodity Futures Trading Commission (CFTC) has revised many of its key rules governing firms that serve as intermediaries in commodity futures and options transactions: futures commission merchants, introducing brokers, commodity pool operators, and commodity trading advisors. These revisions will also affect associated persons of these firms, as well as floor brokers and floor traders. Consideration of further regulatory relief is expected in the near future.

These changes will: (1) permit intermediaries, with customer consent, to deliver transaction and account statements electronically; (2) provide a streamlined process for opening customer accounts that involves certain disclosures being included in the customer agreement and being acknowledged by the customer through a single signature; (3) permit applicants for registration as introducing brokers who have raised their own capital to file unaudited financial reports to demonstrate satisfaction of the minimum financial requirements; (4) reduce the number of officers that are considered principals and must therefore be listed on a firm’s registration application and file an individual registration form and fingerprints; (5) provide customers with greater flexibility in closing out offsetting positions; (6) permit greater flexibility in ethics training by replacing the current prescriptive rule with a Statement of Acceptable Practices; and (7) provide retail customers broader access to registered derivatives transaction execution facilities by permitting retail customers to trade through a commodity trading advisor with $25 million or more in assets under management.

Acting Chairman James E. Newsome emphasized that “these rules are just the first step in the Commission’s review of appropriate regulatory relief for intermediaries. We have begun the intermediary study that Congress directed us to perform and we may well be implementing additional regulatory reforms prior to the study’s conclusion.”

The new rules and rule amendments will become effective upon being published in the Federal Register. 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.