Release: #4036-97
For Release: July 24, 1997

CFTC ISSUES GUIDANCE CONCERNING ELECTRONIC DELIVERY OF DISCLOSURE DOCUMENTS BY COMMODITY POOL OPERATORS AND COMMODITY TRADING ADVISORS

On July 22, 1997, the Commodity Futures Trading Commission (Commission) published in the Federal Register an Interpretation regarding use of electronic media by commodity pool operators (CPO) and commodity trading advisors (CTA) for delivery of disclosure documents and other Materials (62 Fed. Reg. 39104). The Interpretation states the Commission's views concerning electronic delivery and storage of disclosure documents and related materials. The effective date of the Interpretation is August 21, 1997.

Among other things, the Commission's interpretative guidance makes clear that a CPO or CTA may satisfy the delivery requirements of rule 4.21 or 4.31 by electronic media by presenting the prospective customer with a summary risk disclosure statement and access by hyperlink (or similarly immediate connection) to the full disclosure document. The Commission also clarified that a customer's acknowledgment of receipt of an electronically delivered disclosure document may be established by use of a personal identification number (PIN) as well as by any alternate method that uses a unique identifier to confirm the recipient's identity.

The Interpretation permits CPOs and CTAs to maintain required records of electronically delivered disclosure documents or other communications either in accordance with Commission rule 1.31 or pursuant to the guidance provided by the Securities and Exchange Commission in its recent rulemaking concerning recordkeeping by broker-dealers (Securities Exchange Act Release No. 34-38245, 62 Fed. Reg. 6469 (February 12, 1997)).

In the same July 22 Federal Register release, the Commission also announced adoption of certain technical changes to rules 4.1, 4.21 and 4.31 (proposed at 61 Fed. Reg. 44009 (August 27, 1996)), which clarify the application of document format and acknowledgment of receipt requirements to electronically delivered documents.