CFTC Grants Relief to Improve CTA Recordkeeping Efficiency

The CFTC Division of Swap Dealer and Intermediary Oversight issued an exemption letter that permits commodity trading advisors ("CTAs") to store their records with third-party record keepers. This relief is modeled on relief granted previously to commodity pool operators (see CFTC Rules 4.7(b)(4)-(5) and 4.23(c), and CFTC Staff Letter 14-114).

In order to rely on this relief, a CTA must file a notice with the CFTC that includes certain identifying information about the third-party record keeper, as well as representations regarding compliance with recordkeeping and production requirements. CTAs must make the filing (i) at the time they register with the CFTC, (ii) on entering into a recordkeeping arrangement with a third-party record keeper, or (iii) by June 30, 2017 – whichever event is latest.

The CFTC exemption relieves CTAs of the obligation to maintain records at their main business office, and permits CTAs to store their records with any type of third-party record keeper. The exemption also specifies that firms maintaining their records with a third-party record keeper must remain responsible for meeting their recordkeeping obligations under the CFTC Rules, and that any failure by a third-party record keeper to keep or produce the required records will be deemed to be a failure on the part of the regulated firm.