Conflict of Interest Policies and Procedures by Future Commission Merchants and introducing Brokers

Section 732 of Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act, Pub L. No. 111-203, 124 Stat. 1376 (2010)) amended section 4d of the Commodity Exchange Act (“CEA”) to require each futures commission merchant (“FCM”) and introducing broker (“IB”) to implement conflicts of interest systems and procedures that: (1) establish structural and institutional safeguards reasonably designed to ensure that any persons within the firm researching or analyzing the price or market for any commodity are separated by appropriate informational partitions within the firm from the review, pressure or oversight of persons whose involvement in trading or clearing activities might potentially bias their judgment or supervision, and (2) address other issues that the Commission determines to be appropriate. Pursuant to section 4d(c) of the CEA, the Commission adopted regulation 1.71. The regulation generally requires FCMs and IBs to: (1) develop conflicts of interest systems, procedures and disclosures; (2) adopt and implement written policies and procedures reasonably designed to ensure compliance with its conflicts of interest and disclosure obligations; and (3) maintain specified records related to those requirements. “Small introducing brokers,” as defined within the regulation, are subject to modified requirements, but are obligated to adopt certain policies and procedures and to provide specified disclosures. The regulation does not require reporting to the Commission. The recordkeeping obligations imposed by the regulation are essential to ensuring that FCMs and IBs develop and maintain the conflicts of interest systems, procedures, and disclosures required by the CEA and Commission regulations and to the effective evaluation of such registrants’ actual compliance with the CEA and Commission regulations

The latest form for Conflict of Interest Policies and Procedures by Future Commission Merchants and introducing Brokers expires 2028-09-30 and can be found here.