CFTC Oral Communication Recordkeeping Requirement

April 14, 2014

A registered commodity trading advisor (“CTA”) that is a member of a designated contract market (“DCM”) or swap execution facility (“SEF”) is required to keep full, complete, and systematic records, which include all pertinent data and memoranda, of all transactions relating to its business of dealing in commodity interests and related cash or forward transactions.1 A CTA with direct access trading privileges to a SEF is deemed to be a member of the SEF.

Included among the records required are all oral and written communications provided or received concerning quotes, solicitations, bids, offers, instructions, trading, and prices that lead to the execution of a transaction in a commodity interest and related cash or forward transactions, whether communicated by telephone, voicemail, facsimile, instant messaging, chat rooms, electronic mail, mobile device, or other digital or electronic media.

The CFTC granted temporary relief from this oral recording requirement through a No-Action Letter. This relief will expire on May 1, 2014. A CTA that is a member of a DCM of SEF should arrange for recording of covered oral communications before this date.

If you have any questions concerning the foregoing, please contact your primary attorney in Seward & Kissel’s Investment Management Group.


1 This requirement does not apply to commodity pool operators, but it does apply to other categories of persons, such as futures commission merchants and introducing brokers.