CFTC’s Modernized Record-keeping Rules Take Effect on August 28
In late May, the CFTC adopted amendments to its record-keeping rule, Rule 1.31, applicable to CFTC registrants who are obliged to keep specified records under the Commodity Exchange Act (CEA) and the CFTC’s rules. The amendments take effect on August 28.
Until the amendment, CFTC rules required that records be kept in their native file formats; that electronic records be retained in a non-rewritable, non-erasable format; that registrants engage third-party technical consultants and the consultants file representations with the CFTC regarding access to those records. In the several decades since Rule 1.31 was first written, technological changes have made parts of it technologically obsolete, and the CFTC’s action is designed to streamline, modernize and simplify the burden of record-keeping on Commission registrants. Those specific requirements are now being eliminated, in favor of a more flexible and principles-based approach.
In particular, the Commission
- has added the term, “records entity” to mean any person or entity required by the CEA or CFTC rules to keep regulatory records;
- has replaced references to “books and records” with the defined term, “regulatory records,” and now differentiates between electronic regulatory records and paper regulatory records. “Regulatory records” include “all books and records required to be kept” by the CEA or CFTC’s regulations, including data concerning corrections and alterations to those records. “Electronic regulatory records” includes all regulatory records other than those created and maintained exclusively on paper, as well as the data necessary to access, search or display those records. The records entity is obliged to maintain data about the regulatory record after it has been created;
- now requires that regulatory records be maintained in a form and manner that ensures the authenticity and reliability of those records, and that systems and controls be established by the records entity to ensure the authenticity of electronic regulatory records and compliance with Commission requirements, the ability to produce the records in the event of a disruption of the records entity’s record retention systems, and the records entity is obliged to maintain an inventory of all of its information maintenance systems; and
- specifies that regulatory records generally be retained (as is now required) for five years, but now electronic regulatory records must be readily accessible for five years, rather than only for the first two years, as was required previously. Paper regulatory records must be readily accessible only for the first two years after their creation. For records of swaps and related cash and forward transactions, the retention period is the life of the swap plus five years (as has been the case until now).
If you have any questions about these new requirements, please contact me at the address below. This information is provided by the Law Office of John P. Ziaukas for educational and informational purposes only and is not intended and should not be construed as legal advice. This information may be considered advertising under applicable California law. Please refer to the Legal Disclaimers link below.