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Notice I-06-02

January 24, 2006

Effective Date of Amendments to NFA Compliance Rule 2-10: Recordkeeping

NFA has received notice that the Commodity Futures Trading Commission has approved changes to NFA Compliance Rule 2-10. These changes will become effective on April 1, 2006. A copy of Compliance Rule 2-10, as revised, is included at the end of this announcement.

The amendments add three new sections to Compliance Rule 2-10. Section (b) requires FCMs to maintain their books and records in an office located in the U.S. Alternatively, an FCM can maintain its books and records in a Part 30 jurisdiction (e.g., Great Britain, Canada) if it is subject to regulation there. The rule requires FCMs that maintain their books and records in a Part 30 jurisdiction to reimburse NFA for any additional travel and related expenses.

Section (c) applies to all Members subject to minimum capital requirements (i.e., FCMs and independent IBs). It requires them to prepare financial and other required reports in English, using U.S. dollars and U.S. accounting standards, and to maintain a general ledger in English using U.S. dollars.

Section (d) applies to all Members. It requires Members to:

  • file documents with NFA in English;

  • maintain English translations of foreign-language promotional material;

  • maintain required procedures in English;

  • provide English translations of other documents when requested by NFA; and

  • ensure that an English-speaking individual who is knowledgeable about the firm's business is available to assist NFA during an audit.

Questions concerning these requirements should be directed to John Brodersen, Associate Director, Compliance, at jbrodersen@nfa.futures.org or (312) 781-2226.

COMPLIANCE RULES

* * *

RULE 2-10. RECORDKEEPING

  1. Each Member shall maintain adequate books and records necessary and appropriate to conduct its business including, without limitation, the records required to be kept under CFTC Regulations 1.18 and 1.32 through 1.37 for the period required under CFTC Regulation 1.31.

  2. Each FCM Member must either:

    1. Maintain an office in the continental United States, Alaska, Hawaii, or Puerto Rico responsible for preparing and maintaining financial and other records and reports required by CFTC and/or NFA rules; or

    2. Maintain an office in a jurisdiction that the CFTC has found to have a comparable regulatory scheme for purposes of Part 30 of the CFTC's rules and be subject to that regulatory scheme. This foreign office must be responsible for preparing and maintaining financial and other records and reports required by CFTC and/or NFA rules, and the Member must agree to reimburse NFA for any travel, translation, telephone, and similar expenses incurred in connection with inquiries, examinations and investigations of the Member that exceed the normal expenses incurred by NFA in examining an FCM Member located at the closest point in the continental United States, Alaska, Hawaii, or Puerto Rico.

  3. Member subject to minimum capital requirements must:

    1. prepare financial reports required to be filed with the CFTC and/or NFA in English, using U.S. dollars, and according to U.S. accounting standards; and

    2. maintain a general ledger in English using U.S. dollars.

  4. Each Member must:

    1. file reports, requests for extensions, and other documents required to be filed with the CFTC and/or NFA in English;

    2. maintain English translations of all foreign-language promotional material, including disclosure documents and Web sites, distributed to or intended for viewing by customers located in the United States, its territories, or possessions;

    3. maintain written procedures required by CFTC or NFA rules in English (as well as in any other language if necessary for them to be understood by the Member's employees and agents);

    4. provide English translations of other foreign-language documents and records and file financial information in U.S. dollars when requested by NFA; and

    5. make available to NFA (during an examination or to respond to other inquiries) an individual who is authorized to act on the Member's behalf, is fluent in English, and is knowledgeable about the Member's business and about financial matters.

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