Effective December 21, 2013 CFTC Regulation 1.35(a) will require FCMS, certain IBs, and RFEDs to tape record all oral communications concerning quotes, solicitations, bids, offers, and instructions, trading, and prices that lead to the execution of a transaction in a commodity interest. This includes the obligation to record anything related to cash or forward transactions.
However, there are limited exceptions to this new regulation. If you are an IB generating less than $5 million in aggregate gross revenues from its activities as an IB over the preceding three years in total, you are not required to tape record oral communications.
Moreover, the regulation provides that the CFTC’s Director of the Division of Swap Dealer and Intermediary Oversight (DSIO) can establish an alternative compliance schedule if the requirement to record oral communications is found to be technologically or economically impracticable for the affected FCM, IB, or RFED, they must submit a request for relief to DSIO at the CFTC, Three Lafayette Centre, 11 21st Street, NW, Washington, DC 20581.
The request must include the following:
- A factual basis why compliance with the oral record keeping requirement is technologically or economically impracticable
- The specific costs and technical obstacles particular to the firm
- The efforts the FCM, IB, or RFED intends to make to ensure compliance according to an alternative compliance schedule
The request for relief shall be acted upon within 30 days or it shall be deemed approved.
Please contact us if you need assistance complying with this new amendment.