CFTC approves rule requiring firms to keep track of brokers’ oral communications

Gary Gensler

Gary Gensler

The CFTC approved a final rule on Monday that would require registered firms to record the telephone, voicemail and cell phone communications of their brokers for up to one year.

Firms that trade in commodity futures contracts, forex contracts, commodity options and swaps would be subject to the oral communication record-keeping requirement. The rule affects retail forex dealers with more than $5 million in gross revenue, introducing brokers and futures commission merchants, though it exempts floor traders, floor brokers and commodity pool operators that trade for themselves, Reuters reports.

The CFTC said that the rule integrates record-keeping requirements from Dodd-Frank and for futures commission merchants.

“The rule will make enforcement investigations more efficient by preserving critical evidence that otherwise may be lost to memory lapses and inconsistent recollections,” Gary Gensler, the chairman of the CFTC, said, according to Reuters. “The Commission will have access to evidence of fraud and market manipulation, which is expected to increase the success of enforcement actions for the benefit [of] customers, market participants and the markets. Moreover, it also will also protect customers from abusive sales practices, lower the risk of transactional disputes and allow registrants to follow-up more effectively on customer complaints.”

Firms subject to the rule will be required to maintain paper records for up to one year, in addition to records of oral communications. They are required to store the communications data in a “verifiable and searchable” manner.

The rule will take effect one year after its publication in the Federal Register.

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