Brokers Required to Record Phone Conversations

| December 18, 2012
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Washington (DTN) — The Commodity Futures Trading Commission approved a rule that requires brokers to record telephone conversations when they are negotiating futures, options, swaps and retail foreign-exchange contracts.
“The rule enhances the Commission’s enforcement program for the futures market to promote market integrity and protect customers,” CFTC Chairman Gary Gensler said Monday in a statement.
The CFTC said market participants would be required to record “solicitations, bids, offers, instructions, trading, and prices” that lead to a derivatives deal but wouldn’t have to record cash commodity transactions.
The CFTC had originally proposed including cash transactions, but agricultural companies said cash transactions with farmers shouldn’t be included.
Diana Klemme, vice president of Grain Service Corp.,  an Atlanta-based brokerage, said the change in the rule is good because the original proposal “would have been impossible to comply with,” as transactions in rural areas are often done outside, not over the phone.
Brokers and dealers that take in more than $5 million a year in revenue, as well as exchange members, will be responsible for recording the conversations.
Records of oral communication have to be kept for one year.  Traders already have to retain written transaction records for five years and the rule makes clear that emails and instant messages are included.
The five-member commission approved the rule in a closed-door vote.  The rule will got into effect 60 days after publication in the Federal Register, but firms have a year to comply.

Category: Farm, Farm News