(a) General rule. A banking institution engaging in retail forex
transactions shall keep full, complete and systematic records, together
with all pertinent data and memoranda, of all transactions relating
to its retail forex business, including:
(1) Retail forex
account records. For each retail forex account:
(i) The
name and address of the person for whom such retail forex account
is carried or introduced and the principal occupation or business
of the person;
(ii)
The name of any other person guaranteeing the account or exercising
trading control with respect to the account;
(iii) The establishment or termination
of the account;
(iv) A means to identify the person who has solicited and is responsible
for the account or assign account numbers in such a manner as to identify
that person;
(v)
The funds in the account, net of any commissions and fees;
(vi) The account’s net profits
and losses on open trades;
(vii) The funds in the account plus
or minus the net profits and losses on open trades, adjusted for the
net option value in the case of open options positions;
(viii) Financial ledger
records that show separately for each retail forex customer all charges
against and credits to such retail forex customer’s account, including
but not limited to retail forex customer funds deposited, withdrawn,
or transferred, and charges or credits resulting from losses or gains
on closed transactions; and
(ix) A list of all retail forex transactions executed for the account,
with the details specified in paragraph (a)(2) of this section.
(2) Retail forex transaction records. For each
retail forex transaction:
(i) The date and time the banking institution
received the order;
(ii) The price at which the banking institution placed the order,
or, in the case of an option, the premium that the retail forex customer
paid;
(iii) The customer
account identification information;
(iv) The currency pair;
(v) The size or quantity of the order;
(vi) Whether the order
was a buy or sell order;
(vii) The type of order, if the order
was not a market order;
(viii) The size and price at which the order is executed, or in the
case of an option, the amount of the premium paid for each option
purchased, or the amount credited for each option sold;
(ix) For options, whether
the option is a put or call, expiration date, quantity, underlying
contract for future delivery or underlying physical, strike price,
and details of the purchase price of the option, including premium,
mark-up, commission, and fees;
(x) For futures, the delivery date;
and
(xi) If the order
was made on a trading platform:
(A) The price quoted on the trading
platform when the order was placed, or, in the case of an option,
the premium quoted;
(B)
The date and time the order was transmitted to the trading platform;
and
(C) The date and time
the order was executed.
(3) Price changes
on a trading platform. If a trading platform is used, daily logs
showing each price change on the platform, the time of the change
to the nearest second, and the trading volume at that time and price.
(4) Methods or algorithms. Any method or algorithm
used to determine the bid or asked price for any retail forex transaction
or the prices at which customers orders are executed, including, but
not limited to, any markups, fees, commissions or other items which
affect the profitability or risk of loss of a retail forex customer’s
transaction.
(5) Daily records which show for each business day complete details
of:
(i) All retail forex transactions that
are futures transactions executed on that day, including the date,
price, quantity, market, currency pair, delivery date, and the person
for whom such transaction was made;
(ii) All retail forex transactions that
are option transactions executed on that day, including the date,
whether the transaction involved a put or call, the expiration date,
quantity, currency pair, delivery date, strike price, details of the
purchase price of the option, including premium, mark-up, commission
and fees, and the person for whom the transaction was made; and
(iii) All other retail
forex transactions executed on that day for such account, including
the date, price, quantity, currency and the person for whom such transaction
was made.
(6) Other records. Written acknowledgements
of receipt of the risk disclosure statement required by section 240.6(b),
offset instructions pursuant to section 240.5(c), records required
under paragraphs (b) through (f) of this section, trading cards, signature
cards, street books, journals, ledgers, payment records, copies of
statements of purchase, and all other records, data and memoranda
that have been prepared in the course of the banking institution’s
retail forex business.
(b) Ratio of profitable accounts.
(1) With respect to its active retail forex
customer accounts over which it did not exercise investment discretion
and that are not retail forex proprietary accounts open for any period
of time during the quarter, a banking institution shall prepare and
maintain on a quarterly basis (calendar quarter):
(i) A calculation
of the percentage of such accounts that were profitable;
(ii) A calculation of the
percentage of such accounts that were not profitable; and
(iii) Data supporting the
calculations described in paragraphs (b)(1)(i) and (b)(1)(ii) of this
section.
(2) In calculating whether a retail forex account was profitable
or not profitable during the quarter, the banking institution shall
compute the realized and unrealized gains or losses on all retail
forex transactions carried in the retail forex account at any time
during the quarter, and subtract all fees, commissions, and any other
charges posted to the retail forex account during the quarter, and
add any interest income and other income or rebates credited to the
retail forex account during the quarter. All deposits and withdrawals
of funds made by the retail forex customer during the quarter must
be excluded from the computation of whether the retail forex account
was profitable or not profitable during the quarter. Computations
that result in a zero or negative number shall be considered a retail
forex account that was not profitable. Computations that result in
a positive number shall be considered a retail forex account that
was profitable.
(3)
A retail forex account shall be considered “active” for purposes of
paragraph (b)(1) of this section if and only if, for the relevant
calendar quarter, a retail forex transaction was executed in that
account or the retail forex account contained an open position resulting
from a retail forex transaction.
(c) Records related to possible violations of law. A banking institution engaging in retail forex transactions shall
make a record of all communications received by the banking institution
or its related persons concerning facts giving rise to possible violations
of law related to the banking institution’s retail forex business.
The record shall contain: the name of the complainant, if provided;
the date of the communication; the relevant agreement, contract, or
transaction; the substance of the communication; and the name of the
person who received the communication and the final disposition of
the matter.
(d) Records
for noncash margin. A banking institution shall maintain a record
of all noncash margin collected pursuant to section 240.9. The record
shall show separately for each retail forex customer:
(1) A description of the securities or
property received;
(2) The name and address of such retail forex customer;
(3) The dates when the securities
or property were received;
(4) The identity of the depositories or other places where such securities
or property are segregated or held, if applicable;
(5) The dates on which the banking institution
placed or removed such securities or property into or from such depositories;
and
(6) The dates of
return of such securities or property to such retail forex customer,
or other disposition thereof, together with the facts and circumstances
of such other disposition.
(e) Order tickets.
(1) Except as provided in paragraph (e)(2)
of this section, immediately upon the receipt of a retail forex transaction
order, a banking institution shall prepare an order ticket for the
order (whether unfulfilled, executed or canceled). The order ticket
shall include:
(i) Account identification (account
or customer name with which the retail forex transaction was effected);
(ii) Order number;
(iii) Type of order
(market order, limit order, or subject to special instructions);
(iv) Date and time,
to the nearest minute, the retail forex transaction order was received
(as evidenced by timestamp or other timing device);
(v) Time, to the nearest minute, the
retail forex transaction order was executed; and
(vi) Price at which the retail forex
transaction was executed.
(2) Post-execution
allocation of bunched orders. Specific identifiers for retail
forex accounts included in bunched orders need not be recorded at time
of order placement or upon report of execution as required under paragraph
(e)(1) of this section if the following requirements are met:
(i) The
banking institution placing and directing the allocation of an order
eligible for post-execution allocation has been granted written investment
discretion with regard to participating customer accounts and makes
the following information available to customers upon request:
(A) The general nature of the post-execution allocation methodology
the banking institution will use;
(B) Whether the banking institution has any
interest in accounts which may be included with customer accounts
in bunched orders eligible for post-execution allocation; and
(C) Summary or composite data
sufficient for that customer to compare the customer’s results with
those of other comparable customers and, if applicable, any account
in which the banking institution has an interest.
(ii) Post-execution
allocations are made as soon as practicable after the entire transaction
is executed;
(iii)
Post-execution allocations are fair and equitable, with no account
or group of accounts receiving consistently favorable or unfavorable
treatment; and
(iv)
The post-execution allocation methodology is sufficiently objective
and specific to permit the Board to verify fairness of the allocations
using that methodology.
(f) Record of monthly statements and confirmations. A banking institution shall retain a copy of each monthly statement
and confirmation required by section 240.10.
(g) Form of record and manner of maintenance. The records required by this section must clearly and accurately
reflect the information required and provide an adequate basis for
the audit of the information. A banking institution must create and
maintain audio recordings of oral orders and oral offset instructions.
Record maintenance may include the use of automated or electronic
records provided that the records are easily retrievable, and readily
available for inspection.
(h) Length of maintenance. A banking institution
shall keep each record required by this section for at least five
years from the date the record is created.
