How Long Does It Take To Register As A Futures Commission Merchant

§ i.55 Public disclosures by futures commission merchants.

(a)

(one) Except equally provided in i.65, no futures commission merchant, or in the case of an introduced account no introducing banker, may open a commodity futures account for a customer, other than for a customer specified in paragraph (f) of this section, unless the futures commission merchant or introducing broker first:

(i) Furnishes the customer with a separate written disclosure statement containing only the language set forth in paragraph (b) of this section (except for nonsubstantive additions such as captions) or equally otherwise canonical under paragraph (c) of this section; Provided, however, that the disclosure argument may be attached to other documents as the encompass page or the starting time page of such documents and every bit the only material on such page; and

(ii) Receives from the customer an acknowledgment signed and dated by the customer that he received and understood the disclosure statement.

(b) The linguistic communication set forth in the written disclosure document required by paragraph (a) of this section shall be as follows:

Chance Disclosure Statement

The adventure of loss in trading commodity futures contracts can be substantial. You should, therefore, carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should exist enlightened of the post-obit points:

(ane) You may sustain a total loss of the funds that you deposit with your banker to establish or maintain a position in the commodity futures market, and y'all may incur losses beyond these amounts. If the market moves against your position, you may exist chosen upon past your banker to eolith a substantial amount of additional margin funds, on short notice, in society to maintain your position. If you lot do not provide the required funds within the time required past your banker, your position may be liquidated at a loss, and yous will exist liable for whatsoever resulting arrears in your account.

(ii) The funds you deposit with a futures commission merchant for trading futures positions are not protected by insurance in the outcome of the defalcation or insolvency of the futures commission merchant, or in the upshot your funds are misappropriated.

(3) The funds yous deposit with a futures commission merchant for trading futures positions are not protected past the Securities Investor Protection Corporation even if the futures committee merchant is registered with the Securities and Commutation Commission equally a broker or dealer.

(4) The funds yous deposit with a futures committee merchant are by and large not guaranteed or insured by a derivatives immigration organization in the event of the bankruptcy or insolvency of the futures commission merchant, or if the futures commission merchant is otherwise unable to refund your funds. Certain derivatives clearing organizations, even so, may take programs that provide limited insurance to customers. You should inquire of your futures commission merchant whether your funds will be insured by a derivatives clearing organization and you should understand the benefits and limitations of such insurance programs.

(5) The funds you eolith with a futures commission merchant are non held by the futures commission merchant in a separate account for your individual benefit. Futures commission merchants commingle the funds received from customers in one or more accounts and you may be exposed to losses incurred by other customers if the futures committee merchant does non accept sufficient capital to cover such other customers' trading losses.

(half dozen) The funds yous deposit with a futures commission merchant may be invested past the futures commission merchant in certain types of fiscal instruments that have been approved by the Commission for the purpose of such investments. Permitted investments are listed in Commission Regulation i.25 and include: U.Southward. government securities; municipal securities; money marketplace mutual funds; and certain corporate notes and bonds. The futures commission merchant may retain the interest and other earnings realized from its investment of customer funds. Yous should be familiar with the types of financial instruments that a futures committee merchant may invest customer funds in.

(seven) Futures commission merchants are permitted to deposit client funds with affiliated entities, such as affiliated banks, securities brokers or dealers, or foreign brokers. You should enquire as to whether your futures commission merchant deposits funds with affiliates and assess whether such deposits past the futures commission merchant with its affiliates increases the risks to your funds.

(8) Yous should consult your futures commission merchant concerning the nature of the protections bachelor to safeguard funds or property deposited for your account.

(9) Under certain market place weather, y'all may find information technology difficult or incommunicable to liquidate a position. This tin can occur, for case, when the market reaches a daily cost fluctuation limit ("limit move").

(ten) All futures positions involve risk, and a "spread" position may not exist less risky than an outright "long" or "short" position.

(eleven) The high degree of leverage (gearing) that is often obtainable in futures trading because of the pocket-size margin requirements can work confronting you besides equally for you. Leverage (gearing) tin lead to large losses as well equally gains.

(12) In addition to the risks noted in the paragraphs enumerated to a higher place, yous should exist familiar with the futures commission merchant yous select to entrust your funds for trading futures positions. The Commodity Futures Trading Commission requires each futures commission merchant to make publicly available on its Web site firm specific disclosures and financial data to help you with your assessment and selection of a futures committee merchant. Information regarding this futures commission merchant may exist obtained by visiting our Spider web site, www.[Web site address].

ALL OF THE POINTS NOTED ABOVE Apply TO ALL FUTURES TRADING WHETHER Strange OR DOMESTIC. IN Improver, IF Yous ARE CONTEMPLATING TRADING Strange FUTURES OR OPTIONS CONTRACTS, Y'all SHOULD BE AWARE OF THE Following Boosted RISKS:

(xiii) Foreign futures transactions involve executing and clearing trades on a foreign commutation. This is the example fifty-fifty if the foreign exchange is formally "linked" to a domestic exchange, whereby a trade executed on one exchange liquidates or establishes a position on the other exchange. No domestic system regulates the activities of a foreign exchange, including the execution, commitment, and clearing of transactions on such an exchange, and no domestic regulator has the power to compel enforcement of the rules of the foreign exchange or the laws of the foreign country. Moreover, such laws or regulations volition vary depending on the foreign land in which the transaction occurs. For these reasons, customers who trade on strange exchanges may not be afforded certain of the protections which use to domestic transactions, including the correct to use domestic alternative dispute resolution procedures. In particular, funds received from customers to margin foreign futures transactions may non be provided the same protections as funds received to margin futures transactions on domestic exchanges. Before y'all merchandise, you should familiarize yourself with the foreign rules which volition apply to your particular transaction.

(14) Finally, you should be aware that the price of whatsoever foreign futures or option contract and, therefore, the potential profit and loss resulting therefrom, may be afflicted by whatever fluctuation in the foreign exchange rate between the time the order is placed and the foreign futures contract is liquidated or the foreign option contract is liquidated or exercised.

THIS BRIEF STATEMENT CANNOT, OF Form, Disembalm ALL THE RISKS AND OTHER ASPECTS OF THE Article MARKETS.

I hereby admit that I have received and understood this take chances disclosure statement.

Date

Signature of Customer

(c) The Commission may corroborate for use in lieu of the risk disclosure document required past paragraph (b) of this department a risk disclosure statement approved by one or more than foreign regulatory agencies or cocky-regulatory organizations if the Commission determines that such risk disclosure argument is reasonably calculated to provide the disclosure required by paragraph (b) of this section. Discover of take a chance disclosure statements that may be used to satisfy Commission disclosure requirements, what requirements such statements encounter and the jurisdictions which accept each format will be set forth in appendix A to this section; Provided, however, that an FCM also provides a customer with the take chances disclosure statement required past paragraph (b) of this section and obtains the customer's acknowledgment that it has read and understands the disclosure document.

(d) Any futures commission merchant, or (in the example of an introduced business relationship) whatsoever introducing banker, may open up a article futures business relationship for a customer without obtaining the separate acknowledgments of disclosure and elections required by this section and by §§ i.33(g) and 33.vii of this chapter, provided that:

(ane) Prior to the opening of such account, the futures commission merchant or introducing banker obtains an acknowledgement from the customer, which may consist of a single signature at the end of the futures commission merchant'southward or introducing broker'south customer business relationship agreement, or on a separate page, of the disclosure statements, consents, and elections specified in this section and § one.33(g), and in §§ 33.7, 155.iii(b)(ii), and 155.4(b)(2) of this chapter, and which may include authorization for the transfer of funds from a segregated customer account to another account of such customer, as listed directly above the signature line, provided the client has acknowledged by check or other indication adjacent to a description of each specified disclosure statement, consent, or election that the customer has received and understood such disclosure statement or made such consent or election; and

(2) The acquittance referred to in paragraph (d)(1) of this section is accompanied past and executed contemporaneously with delivery of the disclosures and constituent provisions required by this section and § 1.33(g), and by § 33.7 of this chapter.

(e) The acknowledgment required by paragraph (a) of this section must be retained by the futures commission merchant or introducing broker in accordance with § 1.31.

(f) A futures commission merchant or, in the case of an introduced account, an introducing broker, may open a commodity futures account for an "institutional customer" as defined in § one.3 without furnishing such institutional customer the disclosure statements or obtaining the acknowledgments required nether paragraph (a) of this section, or §§ i.33(g), i.55(p), and ane.65(a)(3), and §§ 30.half dozen(a), 33.7(a), 155.3(b)(two), and 155.4(b)(2) of this chapter.

(thousand) This section does not save a futures commission merchant or introducing broker from any other disclosure obligation it may have under applicative law.

(h) However whatever other provision of this section or § 1.65, a person registered or required to be registered with the Committee as a futures committee merchant pursuant to sections 4f(a)(i) or 4f(a)(2) of the Commodity Exchange Deed and registered or required to exist registered with the Securities and Substitution Commission as a broker or dealer pursuant to sections xv(b)(ane) or 15(b)(11) of the Securities Exchange Act of 1934 and rules thereunder must provide to a customer or prospective customer, prior to the acceptance of any gild for, or otherwise handling whatsoever transaction in or in connection with, a security futures product for a customer, the disclosures set up along in § 41.41(b)(1) of this chapter.

[The post-obit language should be printed on a page other than the pages containing the disclosure language above and may be omitted from the required disclosure statement]

This disclosure document meets the hazard disclosure requirements in the jurisdictions identified beneath ONLY for those instruments which are specified.

The states: Commodity futures, options on commodity futures and options on commodities subject area to the Article Commutation Act.

United Kingdom: Futures, options on futures, options on commodities and options on equities traded by members of the United kingdom of great britain and northern ireland Securities and Futures Authorization pursuant to the Fiscal Services Human activity, 1986.

Ireland: Financial futures and options on financial futures traded by members of futures exchanges on exchanges whose rules take been approved by the Central Bank of Republic of ireland under Affiliate Eight of the Central Banking concern Deed, 1989.

(i) Even so any other provision of this department, no futures commission merchant may enter into a customer account agreement or first accept funds from a customer, unless the futures commission merchant discloses to the customer all information about the futures commission merchant, including its business, operations, hazard profile, and affiliates, that would be cloth to the customer's decision to entrust such funds to and otherwise practice business with the futures commission merchant and that is otherwise necessary for total and off-white disclosure. In connection with the disclosure of such data, the futures commission merchant shall provide material information about the topics described in paragraph (thou) of this section, expanding upon such data as necessary to keep such disclosure from beingness misleading, whether through omission or otherwise. The futures committee merchant shall also disclose the same information required past this paragraph to all customers existing on the effective date of this paragraph even if the futures commission merchant and such existing customers have previously entered into a customer business relationship agreement or the futures commission merchant has already accepted funds from such existing customers. The futures commission merchant shall update the information required by this section as and when necessary, just at least annually, to continue such data accurate and complete and shall promptly disclose such updated information to all of its customers. In connection with such obligation to update information, the futures commission merchant shall accept into account whatever material change to its concern operation, financial condition and other factors fabric to the client'due south decision to entrust the customer'south funds and otherwise practise business with the futures commission merchant since its most recent disclosure pursuant to this paragraph, and for this purpose shall without limitation consider events that require periodic reporting required to be filed pursuant to § 1.12. For purposes of this section, the disclosures required pursuant to this paragraph will be referred to as the "Disclosure Documents." The Disclosure Documents shall provide a detailed tabular array of contents referencing and describing the Disclosure Documents.

(j)

(1) Each futures commission merchant shall make the Disclosure Documents available to each customer to whom disclosure is required pursuant to paragraph (i) of this section (for purposes of this department, its "FCM Customers") and to the general public.

(ii) A futures commission merchant shall make the Disclosure Documents available to FCM Customers and to the general public by posting a copy of the Disclosure Documents on the futures committee merchant's Web site. A futures commission merchant, still, may use an electronic means other than its Web site to make the Disclosure Documents bachelor to its FCM Customers; provided that:

(i) The electronic version of the Disclosure Documents shall be presented in a format that is readily communicated to the FCM Customers. Data is readily communicated to the FCM Customers if it is accessible to the ordinary computer user by means of commonly bachelor hardware and software and if the electronically delivered certificate is organized in substantially the same manner as would be required for a newspaper document with respect to the club of presentation and the relative prominence of data; and

(ii) A complete paper copy of the Disclosure Documents shall be provided to an FCM Customer upon request.

(k) The futures commission merchant shall provide material information about the following specific topics:

(1) The futures commission merchant's name, address of its principal place of business, phone number, fax number, and email accost;

(ii) The proper name, title, concern address, business background, areas of responsibility, and the nature of the duties of each person that is defined equally a principal of the futures commission merchant pursuant to § iii.1 of this chapter;

(iii) The significant types of business activities and production lines engaged in by the futures commission merchant, and the approximate percentage of the futures commission merchant's assets and capital that are used in each type of activity;

(4) The futures commission merchant's business on behalf of its customers, including types of customers, markets traded, international businesses, and clearinghouses and carrying brokers used, and the futures commission merchant's policies and procedures concerning the selection of bank depositories, custodians, and counterparties to permitted transactions under § 1.25;

(5) The material risks, accompanied by an explanation of how such risks may be textile to its customers, of entrusting funds to the futures committee merchant, including, without limitation, the nature of investments fabricated by the futures commission merchant (including credit quality, weighted average maturity, and weighted average coupon); the futures commission merchant's creditworthiness, leverage, capital, liquidity, primary liabilities, balance sail leverage and other lines of business concern; risks to the futures commission merchant created by its affiliates and their activities, including investment of customer funds in an affiliated entity; and any significant liabilities, contingent or otherwise, and material commitments;

(6) The name of the futures commission merchant's designated self-regulatory arrangement and its Web site address and the location where the annual audited financial statements of the futures commission merchant is made available;

(7) Whatsoever cloth authoritative, ceremonious, enforcement, or criminal complaints or deportment filed against the FCM where such complaints or deportment have non concluded, and any enforcement complaints or actions filed against the FCM during the last three years;

(8) A bones overview of customer fund segregation, futures commission merchant collateral management and investments, futures commission merchants, and joint futures commission merchant/broker dealers;

(9) Data on how a customer may obtain information regarding filing a complaint about the futures commission merchant with the Commission or with the house's designated cocky-regulatory arrangement; and

(ten) The post-obit fiscal data as of the most recent month-cease when the Disclosure Certificate is prepared:

(i) The futures commission merchant'southward total equity, regulatory capital, and internet worth, all computed in accord with U.S. Mostly Accustomed Bookkeeping Principles and § 1.17, equally applicable;

(ii) The dollar value of the futures committee merchant's proprietary margin requirements every bit a percentage of the aggregate margin requirement for futures customers, Cleared Swaps Customers, and 30.vii customers;

(iii) The smallest number of futures customers, Cleared Swaps Customers, and thirty.7 customers that contain l percentage of the futures commission merchant's full funds held for futures customers, Cleared Swaps Customers, and 30.7 customers, respectively;

(iv) The aggregate notional value, by asset form, of all not-hedged, master over-the-counter transactions into which the futures commission merchant has entered;

(v) The corporeality, generic source and purpose of any committed unsecured lines of credit (or like brusk-term funding) the futures committee merchant has obtained simply not withal fatigued upon;

(six) The aggregated corporeality of financing the futures commission merchant provides for customer transactions involving illiquid financial products for which information technology is difficult to obtain timely and accurate prices; and

(vii) The percentage of futures client, Cleared Swaps Customer, and 30.seven customer receivable balances that the futures committee merchant had to write-off every bit uncollectable during the past 12-month period, every bit compared to the electric current residual of funds held for futures customers, Cleared Swaps Customers, and 30.vii customers; and

(11) A summary of the futures commission merchant's current take a chance practices, controls and procedures.

(l) In improver to the foregoing, each futures committee merchant shall adopt policies and procedures reasonably designed to ensure that advertising and solicitation activities by each such futures commission merchant and any introducing brokers associated with such futures committee merchant are not misleading to its FCM Customers in connection with their conclusion to entrust funds to and otherwise do business with such futures committee merchant.

(grand) The Disclosure Document required by paragraph (i) of this department is in addition to the Risk Disclosure Argument required nether paragraph (a) of this section.

(n) All Disclosure Documents, with each Disclosure Document dated the date of start use, shall exist maintained in accordance with § one.31 and shall be made available promptly upon request to representatives of its designated self-regulatory organisation, representatives of the Commission, and representatives of applicable prudential regulators.

(o)

(1) Each futures committee merchant shall make the following financial information publicly available on its Web site:

(i) The daily Statement of Segregation Requirements and Funds in Segregation for Customers Trading on U.Due south. Exchanges for the virtually current 12-calendar month menstruum;

(ii) The daily Statement of Secured Amounts and Funds Held in Separate Accounts for 30.7 Customers Pursuant to Committee Regulation thirty.vii for the almost current 12-month menstruum;

(three) The daily Argument of Cleared Swaps Customer Segregation Requirements and Funds in Cleared Swaps Client Accounts Under Section 4d(f) of the Act for the most current 12-month flow;

(four) A summary schedule of the futures committee merchant's adjusted net capital, net capital, and excess internet capital, all computed in accord with § ane.17 and reflecting balances as of the calendar month-end for the 12 most recent months;

(v) The Argument of Fiscal Condition, the Statement of Segregation Requirements and Funds in Segregation for Customers Trading on U.S. Exchanges, the Argument of Secured Amounts and Funds Held in Split Accounts for 30.7 Customers Pursuant to Committee Regulation 30.7, the Argument of Cleared Swaps Customer Segregation Requirements and Funds in Cleared Swaps Customer Accounts Under Department 4d(f) of the Human action, an all related footnotes to the above schedules that are function of the futures commission merchant'due south most electric current certified almanac report pursuant to § 1.xvi; and

(vi) The Argument of Segregation Requirements and Funds in Segregation for Customers Trading on U.S. Exchanges, the Argument of Secured Amounts and Funds Held in Separate Accounts for 30.seven Customers Pursuant to Commission Regulation30.7, and the Statement of Cleared Swaps Customer Accounts Nether Section 4d(f) of the Act that are office of the futures commission merchant's unaudited Course 1-FR-FCM or Financial and Operational Combined Uniform Single Report nether the Securities Exchange Act of 1934 ("FOCUS Report") for the most current 12-month menses.

(2) To the extent any of the financial data identified in paragraph (ane) of this section is amended, the FCM must clearly notate that the data has been amended.

(iii) Each futures commission merchant must include a statement on its Web site that is available to the public that financial information regarding the futures committee merchant, including how the futures committee merchant invests and holds customer funds, may be obtained from the National Futures Association and include a link to the Web site of the National Futures Association's Basic System where data regarding the futures commission merchant's investment of customer funds is maintained.

(4) Each futures commission merchant must include a argument on its Web site that is bachelor to the public that boosted fiscal data on all futures committee merchants is available from the Commodity Futures Trading Committee, and include a link to the Article Futures Trading Commission's Web page for financial data for futures commission merchants.

(p)

(1) Except equally provided in § 1.65, no article broker (other than a immigration organization) may accept holding other than cash from or for the account of a customer, other than a client specified in paragraph (f) of this section, to margin, guarantee, or secure a commodity contract unless the commodity broker beginning furnishes the customer with the disclosure statement set forth in paragraph (p)(two) of this section in boldface impress in at least 10 bespeak type which may be provided every bit either a separate, written document or incorporated into the customer agreement, or with some other argument canonical nether paragraph (c) of this department and fix along in appendix A to this section which the Committee finds satisfies the requirement of this paragraph (p)(ane).

(two) The disclosure argument required by paragraph (p)(one) of this section is equally follows:

THIS Statement IS FURNISHED TO YOU Because REGULATION 1.55(p) OF THE COMMODITY FUTURES TRADING COMMISSION REQUIRES Information technology FOR REASONS OF FAIR Notice UNRELATED TO THIS COMPANY'S Current Financial Condition.

1. YOU SHOULD KNOW THAT IN THE UNLIKELY Issue OF THIS COMPANY'Due south BANKRUPTCY, PROPERTY, INCLUDING Property SPECIFICALLY TRACEABLE TO YOU, WILL BE RETURNED, TRANSFERRED OR DISTRIBUTED TO You lot, OR ON YOUR BEHALF, Simply TO THE EXTENT OF YOUR PRO RATA SHARE OF ALL Property Available FOR DISTRIBUTION TO CUSTOMERS.

2. THE COMMISSION'S REGULATIONS Concerning BANKRUPTCIES OF Article BROKERS CAN Be Institute AT 17 CODE OF FEDERAL REGULATIONS PART 190.

(3) The statement contained in paragraph (p)(2) of this section need exist furnished only one time to each customer to whom information technology is required to be furnished by this section.

[43 FR 31890, July 24, 1978]

Source: https://www.ecfr.gov/current/title-17/chapter-I/part-1/subject-group-ECFR13f523b74fee655/section-1.55

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