cfr_sections
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25 rows where agency = "CFTC" and part_number = 5 sorted by section_id
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| section_id ▼ | title_number | title_name | chapter | subchapter | part_number | part_name | subpart | subpart_name | section_number | section_heading | agency | authority | source_citation | amendment_citations | full_text |
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| 17:17:1.0.1.1.5.0.7.1 | 17 | Commodity and Securities Exchanges | I | 5 | PART 5—OFF-EXCHANGE FOREIGN CURRENCY TRANSACTIONS | § 5.1 Definitions. | CFTC | [75 FR 55432, Sept. 10, 2010, as amended at 77 FR 66332, Nov. 2, 2012] | (a) Affiliated person of a futures commission merchant means a person described in section 2(c)(2)(B)(i)(II)(cc)(BB) of the Act; (b) Aggregate retail forex assets means an amount of liquid assets held in accordance with § 5.8 of this part; (c) Associated person of an affiliated person of a futures commission merchant means any natural person associated with an affiliated person of a futures commission merchant as a partner, officer or employee (or any natural person occupying a similar status or performing similar functions), in any capacity which involves: (1) The solicitation or acceptance of retail forex customers' orders (other than in a clerical capacity); or (2) The supervision of any person or persons so engaged; (d)(1) Commodity pool operator, for purposes of this part, means any person who operates or solicits funds, securities, or property for a pooled investment vehicle that is not an eligible contract participant as defined in section 1a(18) of the Act, and that engages in retail forex transactions; (2) Associated person of a commodity pool operator, for purposes of this part, means any natural person associated with a commodity pool operator as defined in paragraph (d)(1) of this section as a partner, officer, employee, consultant or agent (or any natural person occupying a similar status or performing similar functions), in any capacity which involves: (i) The solicitation of funds, securities, or property for a participation in a pooled investment vehicle; or (ii) The supervision of any person or persons so engaged; (e)(1) Commodity trading advisor, for purposes of this part, means any person who exercises discretionary trading authority or obtains written authorization to exercise discretionary trading authority over any account for or on behalf of any person that is not an eligible contract participant as defined in section 1a(18) of the Act, in connection with retail forex transactions; (2) Associated person of a commodity trading advisor, for purposes of this part, means… | ||||||
| 17:17:1.0.1.1.5.0.7.10 | 17 | Commodity and Securities Exchanges | I | 5 | PART 5—OFF-EXCHANGE FOREIGN CURRENCY TRANSACTIONS | § 5.10 Risk assessment recordkeeping requirements for retail foreign exchange dealers. | CFTC | [75 FR 55432, Sept. 10, 2010, as amended at 76 FR 56106, Sept. 12, 2011] | (a) Requirement to maintain and preserve information. (1) Each retail foreign exchange dealer registered with the Commission pursuant to section 2(c)(2)(B)(i)(II)(ff) of the Act shall prepare, maintain and preserve the following information: (i) An organizational chart which includes the retail foreign exchange dealer and each of its affiliated persons. Included in the organizational chart shall be a designation of which affiliated persons are “Material Affiliated Persons” as that term is used in paragraph (a)(2) of this section, which Material Affiliated Persons file routine financial or risk exposure reports with the Securities and Exchange Commission, a federal banking agency, an insurance commissioner or other similar official or agency of a state, or a foreign regulatory authority, and which Material Affiliated Persons are dealers in financial instruments with off-balance sheet risk and, if a Material Affiliated Person is such a dealer, whether it is also an end-user of such instruments; (ii) Written policies, procedures, or systems concerning the retail foreign exchange dealer's: (A) Method(s) for monitoring and controlling financial and operational risks to it resulting from the activities of any of its affiliated persons; (B) Financing and capital adequacy, including information regarding sources of funding, together with a narrative discussion by management of the liquidity of the material assets of the retail foreign exchange dealer, the structure of debt capital, and sources of alternative funding; (C) Establishing and maintaining internal controls with respect to market risk, credit risk, and other risks created by the retail foreign exchange dealer's trading activities, including systems and policies for supervising, monitoring, reporting and reviewing trading activities in forex transactions, securities, futures contracts, commodity options, forward contracts and financial instruments; policies for hedging or managing risks created by trading activities or supervising accounts carried for aff… | ||||||
| 17:17:1.0.1.1.5.0.7.11 | 17 | Commodity and Securities Exchanges | I | 5 | PART 5—OFF-EXCHANGE FOREIGN CURRENCY TRANSACTIONS | § 5.11 Risk assessment reporting requirements for retail foreign exchange dealers. | CFTC | [75 FR 55432, Sept. 10, 2010, as amended at 76 FR 56106, Sept. 12, 2011] | (a) Reporting requirements with respect to information required to be maintained by § 5.10 of this part. (1) Each retail foreign exchange dealer registered with the Commission pursuant to Section 2(c)(2)(B)(i)(II)(ff) of the Act shall file the following with the regional office of the Commission with which it files periodic financial reports within 60 calendar days after the effective date of such registration: (i) A copy of the organizational chart maintained by the retail foreign exchange dealer pursuant to § 5.10(a)(l)(i) of this part. Where there is a material change in information provided, an updated organizational chart shall be filed within sixty calendar days after the end of the fiscal quarter in which the change has occurred; and (ii) Copies of the financial, operational, and risk management policies, procedures and systems maintained by the retail foreign exchange dealer pursuant to § 5.10(a)(l)(ii) of this part. If the retail foreign exchange dealer has no such written policies, procedures or systems, it must file a statement so indicating. Where there is a material change in information provided, such change shall be reported within sixty calendar days after the end of the fiscal quarter in which the change has occurred. (2) Each retail foreign exchange dealer registered with the Commission pursuant to section 2(c)(2)(B)(i)(II)(ff) of the Act shall file the following with the regional office with which it files periodic financial reports within 105 calendar days after the end of each fiscal year or, if a filing is made pursuant to a written notice issued under paragraph (a)(2)(iii) of this section, within the time period specified in the written notice: (i) Fiscal year-end consolidated and consolidating balance sheets for the highest level Material Affiliated Person within the retail foreign exchange dealer's organizational structure, which shall include the retail foreign exchange dealer and its other Material Affiliated Persons, prepared in accordance with generally accepted accounting princ… | ||||||
| 17:17:1.0.1.1.5.0.7.12 | 17 | Commodity and Securities Exchanges | I | 5 | PART 5—OFF-EXCHANGE FOREIGN CURRENCY TRANSACTIONS | § 5.12 Financial reports of retail foreign exchange dealers. | CFTC | (a)(1) Each person who files an application for registration as a retail foreign exchange dealer with the National Futures Association shall submit, concurrently with the filing of such application, either: (i) A Form 1-FR-FCM certified by an independent public accountant as of a date not more than 45 days prior to the date on which such report is filed; or (ii) A Form 1-FR-FCM as of a date not more than 17 business days prior to the date on which such report is filed and a Form 1-FR-FCM certified by an independent public accountant as of a date not more than one year prior to the date on which such report is filed. (2) Each such person must include with such financial report a statement describing the source of his current assets and representing that his capital has been contributed for the purpose of operating his business and will continue to be used for such purpose. (3) The provisions of paragraph (a)(1) of this section do not apply to any person succeeding to and continuing the business of another retail foreign exchange dealer. (b)(1) Each person registered as a retail foreign exchange dealer must file a Form 1-FR-FCM as of the close of business each month. Each Form 1-FR must be filed no later than 17 business days after the date for which the report is made. (2) In addition to the monthly financial reports required by paragraph (b)(1) of this section, each person registered as a retail foreign exchange dealer must file a Form 1-FR-FCM as of the close of its fiscal year, which must be certified by an independent public accountant and must be filed no later than 90 days after the close of the retail foreign exchange dealer's fiscal year. (3) A Form 1-FR-FCM required to be certified by an independent public accountant which is filed by a retail foreign exchange dealer must be filed in paper form and may not be filed electronically with the Commission. A Form 1-FR-FCM required to be certified by an independent public accountant which is filed by an applicant for registration as a retail foreign excha… | |||||||
| 17:17:1.0.1.1.5.0.7.13 | 17 | Commodity and Securities Exchanges | I | 5 | PART 5—OFF-EXCHANGE FOREIGN CURRENCY TRANSACTIONS | § 5.13 Reporting to customers of retail foreign exchange dealers and futures commission merchants; monthly and confirmation statements. | CFTC | (a) Monthly statements. Each retail foreign exchange dealer or futures commission merchant must promptly furnish in writing to each retail forex customer, as of the close of the last business day of each month or as of any regular monthly date selected, except for accounts in which there are neither open positions at the end of the statement period nor any changes to the account balance since the prior statement period, but in any event not less frequently than once every three months, a statement which clearly shows: (1) For each retail forex customer: (i) The open retail forex transactions with prices at which acquired; (ii) The net unrealized profits or losses in all open retail forex transactions marked to the market; and (iii) Any money, securities or other property carried with the retail foreign exchange dealer or futures commission merchant; and (iv) A detailed accounting of all financial charges and credits to such retail forex accounts during the monthly reporting period, including money, securities or property received from or disbursed to such customer and realized profits and losses; and (2) For each retail forex customer engaging in forex options transactions: (i) All forex options purchased, sold, exercised, or expired during the monthly reporting period, identified by underlying retail forex transaction or underlying currency, strike price, transaction date, and expiration date; (ii) The open forex option positions carried for such customer as of the end of the monthly reporting period, identified by underlying retail forex transaction or underlying currency, strike price, transaction date, and expiration date; (iii) All open forex option positions marked to the market and the amount each position is in the money, if any; (iv) Any money, securities or other property carried with the retail foreign exchange dealer or futures commission merchant; and (v) A detailed accounting of all financial charges and credits to such retail forex account(s) during the monthly reporting period, includ… | |||||||
| 17:17:1.0.1.1.5.0.7.14 | 17 | Commodity and Securities Exchanges | I | 5 | PART 5—OFF-EXCHANGE FOREIGN CURRENCY TRANSACTIONS | § 5.14 Records to be kept by retail foreign exchange dealers and futures commission merchants. | CFTC | (a) No person shall be registered as a retail foreign exchange dealer under the Act unless, commencing on the date his application for such registration is filed, he prepares and keeps current ledgers or other similar records which show or summarize, with appropriate references to supporting documents, each transaction affecting his asset, liability, income, expense and capital accounts, and in which (except as otherwise permitted in writing by the Commission) all his asset, liability and capital accounts are classified into either the account classification subdivisions specified on Form 1-FR-FCM or categories that are in accord with generally accepted accounting principles as applicable. Each person so registered shall prepare and keep current such records. (b) Each applicant or registrant must make and keep as a record in accordance with § 1.31 of this chapter formal computations of its adjusted net capital and of its minimum financial requirements pursuant to § 1.17 or § 5.7 of this chapter, or the requirements of the designated self-regulatory organization to which it is subject, as applicable, as of the close of business each month. Such computations must be completed and made available for inspection by any representative of the National Futures Association, in the case of an applicant, or of the Commission or designated self-regulatory organization, if any, in the case of a registrant, within 17 business days after the date for which the computations are made, commencing the first month end after the date the application for registration is filed. | |||||||
| 17:17:1.0.1.1.5.0.7.15 | 17 | Commodity and Securities Exchanges | I | 5 | PART 5—OFF-EXCHANGE FOREIGN CURRENCY TRANSACTIONS | § 5.15 Unlawful representations. | CFTC | It shall be unlawful for any person registered pursuant to the requirements of this part to represent or imply in any manner whatsoever that such person has been sponsored, recommended or approved, or that its abilities or qualifications have been reviewed or evaluated, by the Commission, the Federal government or any agency thereof. | |||||||
| 17:17:1.0.1.1.5.0.7.16 | 17 | Commodity and Securities Exchanges | I | 5 | PART 5—OFF-EXCHANGE FOREIGN CURRENCY TRANSACTIONS | § 5.16 Prohibition of guarantees against loss. | CFTC | (a) No retail foreign exchange dealer, futures commission merchant or introducing broker may in any way represent that it will, with respect to any retail foreign exchange transaction in any account carried by a retail foreign exchange dealer or futures commission merchant for or on behalf of any person: (1) Guarantee such person against loss; (2) Limit the loss of such person; or (3) Not call for or attempt to collect security deposits, margin, or other deposits as established for retail forex customers. (b) No person may in any way represent that a retail foreign exchange dealer, futures commission merchant or introducing broker will engage in any of the acts or practices described in paragraph (a) of this section. (c) This section shall not be construed to prevent a retail foreign exchange dealer, futures commission merchant or introducing broker from assuming or sharing in the losses resulting from an error or mishandling of an order. (d) This section shall not affect any guarantee entered into prior to October 18, 2010, but this section shall apply to any extension, modification or renewal thereof entered into after such date. | |||||||
| 17:17:1.0.1.1.5.0.7.17 | 17 | Commodity and Securities Exchanges | I | 5 | PART 5—OFF-EXCHANGE FOREIGN CURRENCY TRANSACTIONS | § 5.17 Authorization to trade. | CFTC | No retail foreign exchange dealer, futures commission merchant, introducing broker or any of their associated persons may directly or indirectly effect a retail forex transaction for the account of any customer unless before the transaction the customer, or person designated by the customer to control the account specifically authorized the retail foreign exchange dealer, futures commission merchant, introducing broker or any of their associated persons to effect the transaction. A transaction is “specifically authorized” if the customer or person designated by the customer to control the account specifies: (a) The precise retail forex transaction to be effected; (b) The exact amount of the foreign currency to be purchased or sold; and (c) In the case of an option, the identity of the foreign currency or contract that underlies the option. | |||||||
| 17:17:1.0.1.1.5.0.7.18 | 17 | Commodity and Securities Exchanges | I | 5 | PART 5—OFF-EXCHANGE FOREIGN CURRENCY TRANSACTIONS | § 5.18 Trading and operational standards. | CFTC | [75 FR 55432, Sept. 10, 2010, as amended at 76 FR 56106, Sept. 12, 2011] | (a) For purposes of this section: (1) The term retail forex counterparty includes, as appropriate: (i) A retail foreign exchange dealer as defined in § 5.1 of this part; (ii) A futures commission merchant as defined in section 1a(28) of the Act; and (iii) An affiliated person of a futures commission merchant as defined in § 5.1 of this part. (2) The term related person when used in reference to a retail forex counterparty means any general partner, officer, director, owner of more than ten percent of the equity interest, associated person or employee of the retail forex counterparty, and any relative or spouse of any of the foregoing persons, or any relative of such spouse, who shares the same home as any of the foregoing persons. (b) Prior to engaging in a retail forex transaction, each retail forex counterparty shall, at a minimum, establish and enforce internal rules, procedures and controls to: (1) Ensure, to the extent possible, that each order received from a retail forex customer which order is executable at or near the price that the retail forex counterparty has quoted to the customer is entered for execution before any order in any retail forex transaction for any proprietary account, any other account in which a related person of the retail forex counterparty has an interest, or any account for which such a related person may originate orders without the prior specific consent of the account owner (if such related person has gained knowledge of the retail forex customer's order prior to the transmission of an order for a proprietary account), an account in which such a related person has an interest, or an account in which such a related person may originate orders without the prior specific consent of the account owner; and (2) Prevent related persons of forex counterparties from placing orders, directly or indirectly, with another person in a manner designed to circumvent the provisions of paragraph (b)(1) of this section; (3) Fairly and objectively establish settlement prices for retail… | ||||||
| 17:17:1.0.1.1.5.0.7.19 | 17 | Commodity and Securities Exchanges | I | 5 | PART 5—OFF-EXCHANGE FOREIGN CURRENCY TRANSACTIONS | § 5.19 Pending legal proceedings. | CFTC | (a) Every retail foreign exchange dealer or futures commission merchant and each CPO, CTA or IB subject to this part 5 shall submit to the Commission copies of any dispositive or partially dispositive decision for which a notice of appeal has been filed, the notice of appeal and such further documents as the Commission may thereafter request filed in any material legal proceeding to which the retail foreign exchange dealer, futures commission merchant, CPO, CTA or IB is a party or to which its property or assets is subject with respect to retail forex transactions. (b) Every retail foreign exchange dealer or futures commission merchant and each CPO, CTA or IB subject to this part 5 shall submit to the Commission copies of any dispositive or partially dispositive decision concerning which a notice of appeal has been filed, the notice of appeal, and such further documents as the Commission may thereafter request filed in any material legal proceeding instituted against any person who is a principal of the retail foreign exchange dealer, futures commission merchant CPO, CTA or IB (as the term “principal” is defined in § 3.1(a) of this chapter) arising from conduct in such person's capacity as a principal of the retail foreign exchange dealer, futures commission merchant, CPO, CTA or IB and alleging violations, with regard to retail forex transactions, of: (1) The Act or any rule, regulation, or order thereunder; or (2) Provisions of state law relating to a duty or obligation owed by such a principal. (c) All documents required by this section to be submitted to the Commission shall be mailed via first-class or submitted by other more expeditious means to the Commission's headquarters office in Washington, DC, Attention: Director, Division of Enforcement. All documents required by this section to be submitted to the Commission as to matters pending on October 18, 2010 shall be mailed to the Commission within 45 days of that effective date. Thereafter, all decisions and notices of appeal required to be submitted b… | |||||||
| 17:17:1.0.1.1.5.0.7.2 | 17 | Commodity and Securities Exchanges | I | 5 | PART 5—OFF-EXCHANGE FOREIGN CURRENCY TRANSACTIONS | § 5.2 Prohibited transactions. | CFTC | (a) Scope. The provisions of this section shall be applicable to any retail forex transaction. (b) Fraudulent conduct prohibited. It shall be unlawful for any person, by use of the mails or by any means or instrumentality of interstate commerce, directly or indirectly, in or in connection with any retail forex transaction: (1) To cheat or defraud or attempt to cheat or defraud any person; (2) Willfully to make or cause to be made to any person any false report or statement or cause to be entered for any person any false record; or (3) Willfully to deceive or attempt to deceive any person by any means whatsoever. (c) Acting as counterparty and exercising discretion prohibited. (1) No person who acts as the counterparty for any retail forex transaction may do so for an account for which the person or any affiliate of the person is authorized (by contract, power of attorney or otherwise) to cause transactions to be effected without the client's specific authorization. (2) For purposes of this paragraph (c), an “affiliate” of a person means a person controlling, controlled by or under common control with, the first person. | |||||||
| 17:17:1.0.1.1.5.0.7.20 | 17 | Commodity and Securities Exchanges | I | 5 | PART 5—OFF-EXCHANGE FOREIGN CURRENCY TRANSACTIONS | § 5.20 Special calls for account and transaction information. | CFTC | [75 FR 55432, Sept. 10, 2010, as amended at 78 FR 22419, Apr. 16, 2013; 82 FR 28767, June 26, 2017; 89 FR 71807, Sept. 4, 2024] | (a) Preparation and transmission of information upon special call. All information required upon special call shall be prepared in such form and manner and in accordance with such instructions, and shall be transmitted at such time and to such office of the Commission, as may be specified in the call. (b) Special calls for information on controlled accounts from retail foreign exchange dealers, futures commission merchants and introducing brokers. Upon call by the Commission, each retail foreign exchange dealer, futures commission merchant and introducing broker shall file with the Commission the names and addresses of all persons who, by power of attorney or otherwise, exercise trading control over any customer's account in retail forex transactions. (c) Special calls for information on open transactions in accounts carried or introduced by retail foreign exchange dealers, futures commission merchants, and introducing brokers. Upon special call by the Commission for information relating to retail forex transactions held or introduced on the dates specified in the call, each retail foreign exchange dealer, futures commission merchant, or introducing broker shall furnish to the Commission the following information concerning accounts of traders owning or controlling such retail forex transaction positions, as may be specified in the call: (1) The name, address, and telephone number of the person for whom each account is carried; (2) The principal business or occupation of the person for whom each account is introduced or carried, as specified in the call; (3) The name, address and principal business or occupation of any person who controls the trading of each account; (4) The name and address of any person having a financial interest of ten percent or more in each account; (5) The number of open retail forex transaction positions introduced or carried in each account, as specified in the call; and (6) The total number of retail forex transactions against which delivery has been made. (d) Delegation… | ||||||
| 17:17:1.0.1.1.5.0.7.21 | 17 | Commodity and Securities Exchanges | I | 5 | PART 5—OFF-EXCHANGE FOREIGN CURRENCY TRANSACTIONS | § 5.21 Supervision. | CFTC | Each Commission registrant subject to this part 5, except an associated person who has no supervisory duties, must diligently supervise the handling by its partners, officers, employees and agents (or persons occupying a similar status or performing a similar function) of all retail forex accounts carried, operated, advised or introduced by the registrant and all other activities of its partners, officers, employees and agents (or persons occupying a similar status or performing a similar function) relating to its business as a Commission registrant. | |||||||
| 17:17:1.0.1.1.5.0.7.22 | 17 | Commodity and Securities Exchanges | I | 5 | PART 5—OFF-EXCHANGE FOREIGN CURRENCY TRANSACTIONS | § 5.22 Registered futures association membership. | CFTC | (a) Each person registered as a retail foreign exchange dealer must become and remain a member of at least one futures association that is registered under section 17 of the Act and that provides for the membership therein of such retail foreign exchange dealer. (b) Each person required to register as: (1) An introducing broker, because the person solicits or accepts orders for retail forex transactions; (2) A commodity pool operator because the person operates, or solicits funds, securities, or property for, a pooled investment vehicle that engages in retail forex transactions; or (3) A commodity trading advisor because the person exercises discretionary trading authority, or obtains written authorization to exercise discretionary trading authority over, an account in connection with retail forex transactions, must become and remain a member of at least one futures association that is registered under section 17 of the Act and that provides for the membership therein of such person. | |||||||
| 17:17:1.0.1.1.5.0.7.23 | 17 | Commodity and Securities Exchanges | I | 5 | PART 5—OFF-EXCHANGE FOREIGN CURRENCY TRANSACTIONS | § 5.23 Notice of bulk transfers and bulk liquidations. | CFTC | [75 FR 55432, Sept. 10, 2010, as amended at 78 FR 22419, Apr. 16, 2013; 89 FR 71807, Sept. 4, 2024] | (a) Notice and disclosure to retail forex customers of a bulk transfer. (1) A retail foreign exchange dealer, futures commission merchant or introducing broker must obtain the written prior and specific consent of its retail forex customer to the assignment of any position or transfer of any account of the retail forex customer to another retail foreign exchange dealer, futures commission merchant or introducing broker, unless made at the retail forex customer's request. (2) Absent a request of the retail forex customer or the consent described in paragraph (a)(1) of this section, assignments of positions and transfers of accounts of retail forex customers may be permitted under rules of the retail forex dealer's, futures commission merchant's, or introducing broker's designated self-regulatory organization that establish notice and other requirements with respect to the assignment of positions and transfers of accounts of retail forex customers. If such rules permit implied consent as a result of the failure of the retail forex customer to object after having received notice of the proposed assignment or transfer, such rules must provide that the notice must include a statement that the retail forex customer is not required to accept the proposed assignment or transfer and may direct the transferor firm to liquidate the positions of the retail forex customer or transfer the account to a firm of the retail forex customer's selection. (3) For assignments and transfers made under this section, other than at the retail forex customer's request, the transferee retail foreign exchange dealer, futures commission merchant or introducing broker must provide to the retail forex customer the risk disclosure statements and forms of acknowledgment required by part 5 of this chapter and receive the required signed acknowledgments within sixty days of such assignments or transfers. This requirement shall not apply: (i) If the transferee retail foreign exchange dealer, futures commission merchant or introducing broker has … | ||||||
| 17:17:1.0.1.1.5.0.7.24 | 17 | Commodity and Securities Exchanges | I | 5 | PART 5—OFF-EXCHANGE FOREIGN CURRENCY TRANSACTIONS | § 5.24 Applicability of other parts of this chapter | CFTC | Insofar as it is consistent with the requirements of this part, all other provisions of this chapter that apply to a person shall apply to such person as though such provisions were expressly set forth in this part. | |||||||
| 17:17:1.0.1.1.5.0.7.25 | 17 | Commodity and Securities Exchanges | I | 5 | PART 5—OFF-EXCHANGE FOREIGN CURRENCY TRANSACTIONS | § 5.25 Applicability of the Act. | CFTC | Except as otherwise specified in this part and unless the context otherwise requires, the provisions of Sections 4b, 4c(b), 4f, 4g, 4k, 4m, 4n, 4o, 6(c)-(e), 6b, 6c, 8(a)-(e), 8a and 12(f) of the Act shall apply to retail forex transactions that are subject to the requirements of this part as though such provisions were set forth herein and included specific references to retail forex transactions and the persons defined in § 5.1 of this part. | |||||||
| 17:17:1.0.1.1.5.0.7.3 | 17 | Commodity and Securities Exchanges | I | 5 | PART 5—OFF-EXCHANGE FOREIGN CURRENCY TRANSACTIONS | § 5.3 Registration of persons engaged in retail forex transactions. | CFTC | [75 FR 55432, Sept. 10, 2010, as amended at 76 FR 56106, Sept. 12, 2011] | (a) Subject to paragraph (b) of this section, each of the following is subject to the registration provisions under the Act and to part 3 of this chapter: (1)(i) Any affiliated person of a futures commission merchant, as defined in § 5.1(a) of this part, which affiliated person: (A) Solicits or accepts orders from any person that is not an eligible contract participant in connection with any retail forex transaction; or (B) Accepts money, securities, or property (or extends credit in lieu thereof) in connection with such solicitation or acceptance of orders in order to engage in any retail forex transaction, is required to register as a retail foreign exchange dealer; and (ii) Any associated person of an affiliated person of a futures commission merchant, as defined in § 5.1(c) of this part, is required to register as an associated person of an affiliated person of a futures commission merchant. (2)(i) Any commodity pool operator, as defined in § 5.1(d)(1) of this part, is required to register as a commodity pool operator; (ii) Any associated person of a commodity pool operator, as defined in § 5.1(d)(2) of this part, is required to register as an associated person of a commodity pool operator; (3)(i) Any commodity trading advisor, as defined in § 5.1(e)(1) of this part, is required to register as a commodity trading advisor; (ii) Any associated person of a commodity trading advisor, as defined in § 5.1(e)(2) of this part, is required to register as an associated person of a commodity trading advisor; (4)(i) Any person registered as a futures commission merchant: (A) That is not primarily or substantially engaged in the business activities described in section 1a(28)(A)(i)(I)(aa)(AA) of the Act and section 1a(28)(A)(i)(II) of the Act insofar as that section references the activities described in section 1a(28)(A)(i)(I)(aa)(AA); (B) That solicits or accepts orders from any person that is not an eligible contract participant in connection with any retail forex transaction; and (C) That accepts money, se… | ||||||
| 17:17:1.0.1.1.5.0.7.4 | 17 | Commodity and Securities Exchanges | I | 5 | PART 5—OFF-EXCHANGE FOREIGN CURRENCY TRANSACTIONS | § 5.4 Applicability of part 4 of this chapter to commodity pool operators and commodity trading advisors. | CFTC | Part 4 of this chapter applies to any person required pursuant to the provisions of this part 5 to register as a commodity pool operator or as a commodity trading advisor. Failure by any such person to comply with the requirements of part 4 will constitute a violation of this section and the relevant section of part 4. | |||||||
| 17:17:1.0.1.1.5.0.7.5 | 17 | Commodity and Securities Exchanges | I | 5 | PART 5—OFF-EXCHANGE FOREIGN CURRENCY TRANSACTIONS | § 5.5 Distribution of “Risk Disclosure Statement” by retail foreign exchange dealers, futures commission merchants and introducing brokers regarding retail forex transactions. | CFTC | [75 FR 55432, Sept. 10, 2010, as amended at 83 FR 7996, Feb. 23, 2018] | (a) Except as provided in § 5.23 of this part, no retail foreign exchange dealer, futures commission merchant, or in the case of an introduced account no introducing broker, may open an account that will engage in retail forex transactions for a retail forex customer, unless the retail foreign exchange dealer, futures commission merchant or introducing broker first: (1)(i) In the case of a retail foreign exchange dealer or a person required to register as an introducing broker solely by reason of this part, furnishes the retail forex customer with a separate written disclosure statement containing only the language set forth in paragraph (b) of this section and the disclosure required by paragraph (e) of this section; (ii) In the case of a futures commission merchant or a person required to register as an introducing broker because it engages in the activities described in § 1.3 of this chapter, furnishes the retail forex customer with a separate written disclosure statement containing only the language set forth in paragraph (b) of this section and the disclosure required by paragraph (e) of this section; Provided, however, that the disclosure statement may be attached to other documents as the initial page(s) of such documents and as the only material on such page(s); and (2) Receives from the retail forex customer an acknowledgment signed and dated by the retail forex customer that he received and understood the disclosure statement. (b) The language set forth in the written disclosure statement required by paragraph (a) of this section shall be as follows: RISK DISCLOSURE STATEMENT OFF-EXCHANGE FOREIGN CURRENCY TRANSACTIONS INVOLVE THE LEVERAGED TRADING OF CONTRACTS DENOMINATED IN FOREIGN CURRENCY CONDUCTED WITH A FUTURES COMMISSION MERCHANT OR A RETAIL FOREIGN EXCHANGE DEALER AS YOUR COUNTERPARTY. BECAUSE OF THE LEVERAGE AND THE OTHER RISKS DISCLOSED HERE, YOU CAN RAPIDLY LOSE ALL OF THE FUNDS YOU DEPOSIT FOR SUCH TRADING AND YOU MAY LOSE MORE THAN YOU DEPOSIT. YOU SHOULD BE AWARE OF AND CAREFUL… | ||||||
| 17:17:1.0.1.1.5.0.7.6 | 17 | Commodity and Securities Exchanges | I | 5 | PART 5—OFF-EXCHANGE FOREIGN CURRENCY TRANSACTIONS | § 5.6 Maintenance of minimum financial requirements by retail foreign exchange dealers and futures commission merchants offering or engaging in retail forex transactions. | CFTC | [75 FR 55432, Sept. 10, 2010, as amended at 78 FR 22419, Apr. 16, 2013; 89 FR 71807, Sept. 4, 2024] | (a) Each futures commission merchant offering or engaging in retail forex transactions or who files an application for registration as a futures commission merchant that will offer or engage in retail forex transactions and each person registered as a retail foreign exchange dealer or who files an application for registration as a retail foreign exchange dealer, who knows or should have known that its adjusted net capital at any time is less than the minimum required by § 5.7 of this part or by the capital rule of a registered futures association of which it is a member, must: (1) Give telephonic notice, to be confirmed in writing by facsimile notice, that the applicant's or registrant's adjusted net capital is less than that required by § 5.7 of this part. The notice must be given immediately after the applicant or registrant knows or should know that its adjusted net capital is less than that required by any of the aforesaid rules to which the applicant or registrant is subject; and (2) Provide together with such notice documentation in such form as necessary to adequately reflect the applicant's or registrant's capital condition as of any date such person's adjusted net capital is less than the minimum required. The applicant or registrant must provide similar documentation for other days as the Commission may request. (b) Each applicant or registrant, who knows or should have known that its adjusted net capital at any time is less than the greatest of: (1) $22,000,000; (2) 110 percent of the amount required by § 5.7(a)(1)(i)(B) of this part; or (3) 110 percent of the amount of adjusted net capital required by a registered futures association of which the futures commission merchant or retail foreign exchange dealer is a member, must file written notice to that effect within 24 hours of such event. (c) If an applicant or registrant at any time fails to make or keep current the books and records required by these regulations, such applicant or registrant must, on the same day such event occurs, provide f… | ||||||
| 17:17:1.0.1.1.5.0.7.7 | 17 | Commodity and Securities Exchanges | I | 5 | PART 5—OFF-EXCHANGE FOREIGN CURRENCY TRANSACTIONS | § 5.7 Minimum financial requirements for retail foreign exchange dealers and futures commission merchants offering or engaging in retail forex transactions. | CFTC | (a)(1)(i) Each futures commission merchant offering or engaging in retail forex transactions and each retail foreign exchange dealer must maintain adjusted net capital equal to or in excess of the greatest of: (A) $20,000,000; (B) $20,000,000 plus five percent of the futures commission merchant's or retail foreign exchange dealer's total retail forex obligation in excess of $10,000,000; (C) any amount required under § 1.17 of this chapter, as applicable; or (D) the amount of adjusted net capital required by a registered futures association of which the futures commission merchant or retail foreign exchange dealer is a member. (ii) Section 1.17 of this chapter shall apply to retail foreign exchange dealers as if such retail foreign exchange dealers were futures commission merchants, or as applicable, applicants or registrants, as stated in § 1.17 for the purpose of determining the adjusted net capital under this section. For the purpose of applying this section, “applicant” or “registrant” shall include retail foreign exchange dealers and futures commission merchants offering or engaging in retail forex transactions and applicants therefore. (2) No person applying for registration as a retail foreign exchange dealer or a futures commission merchant that will engage in retail forex transactions shall be so registered unless such person affirmatively demonstrates to the satisfaction of a registered futures association that it complies with the financial requirements of this section. (3) Each registrant must be in compliance with this section at all times and must be able to demonstrate such compliance to the satisfaction of the Commission or the registrant's designated self-regulatory organization. (4) A registrant who is not in compliance with this section, or is unable to demonstrate such compliance as required by paragraph (a)(3) of this section, shall, as directed by and under the supervision of the Commission or the registrant's designated self-regulatory organization, either liquidate or transfer all r… | |||||||
| 17:17:1.0.1.1.5.0.7.8 | 17 | Commodity and Securities Exchanges | I | 5 | PART 5—OFF-EXCHANGE FOREIGN CURRENCY TRANSACTIONS | § 5.8 Aggregate retail forex assets. | CFTC | (a) Each retail foreign exchange dealer and futures commission merchant offering or engaging in retail forex transactions shall calculate its total retail forex obligation and shall at all times hold assets solely of the type permissible under § 1.25 of this chapter equal to or in excess of the total retail forex obligation at one or more qualifying institutions in the United States or money center countries as defined in § 1.49 of this chapter. (b) For assets held in the United States, a qualifying institution is: (1) A bank or trust company regulated by a United States banking regulator; (2) A broker-dealer registered with the Securities and Exchange Commission and a member of the Financial Industry Regulatory Authority; or (3) A futures commission merchant registered with the Commission and a member of the National Futures Association. (c) For assets held in a money center country, a qualifying institution is: (1) A bank or trust company regulated in a money center country, Provided that the bank or trust company has regulatory capital in excess of $1 billion; (2) An entity regulated in a money center country as an equivalent of a broker-dealer or futures commission merchant as determined by the retail foreign exchange dealer's or futures commission merchant's designated self-regulatory organization, Provided that the entity maintains regulatory capital in excess of $100 million; or (3) A futures commission merchant registered with the Commission and a member of the National Futures Association. (d) Assets held in a money center country are not eligible to meet the requirements of paragraph (a) of this section unless the retail foreign exchange dealer or futures commission merchant has entered into an agreement that is acceptable to the firm's designated self-regulatory organization and that authorizes the qualifying institution to provide account information to the Commission and the firm's designated self-regulatory organization. (e) In computing its adjusted net capital pursuant to § 5.7 of th… | |||||||
| 17:17:1.0.1.1.5.0.7.9 | 17 | Commodity and Securities Exchanges | I | 5 | PART 5—OFF-EXCHANGE FOREIGN CURRENCY TRANSACTIONS | § 5.9 Security deposits for retail forex transactions. | CFTC | (a) Each futures commission merchant engaging, or offering to engage, in retail forex transactions and each retail foreign exchange dealer must collect from each retail forex customer a minimum security deposit for each retail forex transaction equal to the applicable percentage as set by the registered futures association of which they are a member; Provided, that the registered futures association's security deposit requirement cannot be less than: (1) 2% of the notional value of the retail forex transaction for major currency pairs and 5% of the notional value of the retail forex transaction for all other currency pairs; (2) For short options, 2% for major currency pairs and 5% for all other currency pairs of the notional value of the retail forex transaction, plus the premium received by the retail forex customer; or (3) For long options, the full premium charged and received by the futures commission merchant or retail foreign exchange dealer from the retail forex customer. (b) Security deposits must be made in the form of cash or other financial instruments that comply with the requirements specified in § 1.25 of this chapter. (c) A futures commission merchant or retail foreign exchange dealer is required to collect additional security deposits from a retail forex customer, or liquidate the retail forex customer's positions, if the amount of the retail forex customer's security deposits maintained with the futures commission merchant or retail foreign exchange dealer are not sufficient to meet the requirements of this section. (d) A major currency pair security deposit percentage is only applicable when both sides of a retail over-the-counter foreign exchange transaction involve major currencies. (e) Any registered futures association whose members serve as counterparties to retail forex transaction shall designate which currencies are “major currencies”, and shall review, no less frequently than annually, major currency designations and security deposit requirements, and shall adjust the designati… |
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