The CFTC Market Participants Division ("MPD") and the Division of Market Oversight ("DMO") extended through March 31, 2021 previously issued COVID-19 related no-action relief to floor brokers ("FBs") or introducing brokers ("IBs") registered with CME Group Inc. ("CME"), ICE Futures U.S. ("IFUS") and the Minneapolis Grain Exchange, LLC ("MGEX") from oral recordkeeping requirements and, to those designated contract markets ("DCMs"), from audit trail requirements.

CFTC Letter 21-04 extends aspects of the relief provided under CFTC Letters 20-2620-1920-0920-04 and 20-03 (see previous coverage).

The MPD stated that it will not recommend enforcement action against any FB or IB for failure to comply with CFTC Rule 1.35 ("Records of Commodity Interest and Related Cash or Forward Transactions"), provided that the FB or IB:

  • creates a written record of the oral communication;
  • takes "affirmative steps" to collect pertinent written materials relating to the content of the oral communication (e.g., handwritten notes) pursuant to CFTC Rule 1.31 ("Regulatory Records; Retention and Production"); and
  • complies with all DCM rules on which the FB or IB has trading privileges.

The DMO stated that it will not recommend enforcement action against any DCM for failure to comply with CEA Sections  5(d)(4) and  5(d)(10), provided that the DCM:

  • requires FBs and IBs to conduct customer business pursuant to exchange rules;
  • retains customer orders in the normal electronic audit trail system; and
  • complies with all other exchange rules.

Additionally, the MPD and the DMO issued CFTC Letter 21-05, extending through April 15, 2021 similar previously-issued COVID-19 related no-action relief to futures commission merchants, IBs and FBs registered with FIA, CME, IFUS and the MGEX from regulations for which compliance is difficult due to work-from-home. The MPD stated that relief will be extended for certain recording of voice communication requirements under Part 37 of the CFTC regulations, so long as:

  • FIA provides a report detailing the challenges with time stamping due to work-from-home; and
  • persons relying on the relief make efforts to comply with time-stamping requirements and maintain written records of such efforts.

Commentary Steven Lofchie

The condition requiring FIA to provide a report on the difficulties of work-from-home is unusual. Presumably, FIA will report that immediate time stamping may be difficult when the doorbell rings, the dog needs to go out or the kids are crying. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.