Received CFTC 

R!CPrds Section 

Futures Industry Association 

2001. Penmylvania Ave. NW 

Suite. 600 

Washington, DC 20006-1823 

202.466.5460 

202.296.3184 fax 

www.tllttlr~.sindustrv.org 

il(17/tJ9 

By Electronic Mail ~ 

~ 

COMMENT 

August 17,2009 ~ -~ 

Mr. David A. Stawick 

Secretary 

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Commodity Futures Trading Commission 

1155 21st Street NW 

Washington DC 20581 

Re: Account Ownership and Control Report, 74 Fed.Reg. 31642 (July 2, 2009) 

Dear Mr. Stawick: 

The Futures Industry Association ("FIA") is pleased to submit this Jetter in response to the 

Commodity Futures Trading Commission's ("Commission's) advanced notice of proposed 

rulemaking and request for comment with respect to the Commission's determination to collect 

certain ownership, control and related data through a new Ownership and Control Report 

("OCR"). 1 FIA appreciates the Commission's interest in developing a reporting system that 

will "enhance market transparency, leverage the Commission's existing surveillance systems, 

and foster synergies between its market surveillance, trade practice, enforcement and economic 

research programs." 74 Fed.Reg. 31642. Nonetheless, for the reasons discussed below, we 

believe it would be premature to move forward with proposed rules. FIA recommends that the 

Commission first establish an inclusive, industry-wide committee calling on the expertise of all 

affected stake-holders, including but not limited to FCMs, US contract markets and trade 

processing system vendors, to address significant operational and other issues regarding the 

appropriate design of the OCR. 

FlA is a principal spokesman for the commodity futures and options industry. FIA's regular membership 

is comprised of approximately 30 of the largest futures commission merchants ("FCMs") in the United States. 

Among FIA's associate members are representatives from virtually all other segments of the futures industry, both 

national and international. Reflecting the scope and diversity of its membership, FIA estimates that its members 

effect more than eighty percent of all customer transactions executed on United States contract markets. 

To prepare this comment letter, FIA formed a committee comprised of individuals responsible for systems 

development and regulatory reporting, as well as legal and compliance staff, at ten member firms. The views 

expressed in this letter are the result of their careful analysis of the purposes underlying the Commission's 

proposal balanced against the current operations and infonnation technology environment within the futures 

industry. 

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Mr. David A. Stawick 

August 17, 2009 

Page2 

The Commission states that it anticipates that most entities filing the proposed OCR will be 

designated contract markets ("DCMs"), and we agree that the DCMs would be the appropriate 

funnel through which this information is transmitted to the Commission. However, a 

significant amount of the information proposed to be provided through the OCR, if available at 

all, is maintained not at the DCMs but with the FCMs that carry the customers' accounts. The 

financial and operational costs of requiring FCMs to modify their recordkeeping and reporting 

systems in order to be able to provide DCMs with the information proposed to be collected 

through the OCR in an acceptable format would impose a significant burden on FCMs in any 

environment.2 In light of the current fmancial stress that all FCMs are facing to one degree or 

another and the competing demands on limited resources, we are concerned that the potential 

costs will far outweigh the expected benefits to the Commission. 

In this regard, it would be essential that the protocols prescribing the content, format and 

transmission of OCR data from FCMs to the several DCMs be uniform. In addition, 

consideration should be given to establishing a single repository to hold at least some of the 

necessary data, especially since several FCMs might well be submitting information with 

respect to the same account owners and controllers to more than one DCM. In lieu of FCMs 

compiling and transmitting the same data repeatedly, a DCM could simply pull this data from 

the repository. 

FCM Recordkeeping Systems are not Uniform 

The creation, use, form, storage and retention of data are not unifom1 across FCMs. Although 

all FCMs collect certain information to satisfy requirements of applicable law, recordkeeping 

and retention solutions are generally firm-specific. In the case of older accow.1ts, much of the 

information collected may well be on paper stored at offsite warehouse retention centers. Other 

data elements may never have been captured in useful format simply because there was no 

specific regulatory reason to do so. Within the same firm, information proposed to be provided 

through OCR, if available, may not be in a single format or a single system.3 For example, 

taxpayer identification numbers or other government issued identification numbers collected to 

meet anti-money laundering or tax reporting requirements may reside on paper or in an 

electronic system that is different from and incompatible with systems used for credit 

evaluation or generation oftrade confirmations. 

As the Commission is aware, many FCMs use third-party vendors, e.g., Sungard GMI and ION Trading, 

to provide the software required to perform back office recordkeeping and reporting services. FCMs cannot 

control the costs these third-party vendors will incur in modifying their programs to collect the OCR data or the 

time necessary to make such modifications. FCMs, however, will be required to reimburse these vendors for these 

costs. 

The data that the Commission suggests be included in an OCR may be found among the following 

divisions within an FCM: customer account documentation; trading and reporting systems (both vendor-provided 

and proprietary); anti-money laundering; risk management;, tax; credit; and record retention. 
Mr. David A. Stawick 

August 17,2009 

Page 3 

It would be difficult and extremely expensive, therefore, for FCMs to collect this information in 

a single location and then transmit it to a DCM in a uniform, industry-wide format. This 

difficulty is only exacerbated by the consolidation that has occurred within the industry, wruch 

has likely resulted in several FCMs operating more than one system.4 

Information Collected and Maintained is not Uniform 

Similarly, the information that FCMs collect with respect to customers is not uniform. Firms 

may collect different information from account owners or controllers, especially given the 

global nature of some of those entities. For example, it would not be surprising for two FCMs 

to have different mailing addresses for the same account owner, depending on where the 

relationship exists between each FCM and the account owner. Even witrun a single FCM, the 

answer to "what is the address of the account owner" may have many responses, each 

depending on the purpose for wruch the address is intended. 

Separately, we note that the Commission anticipates receiving OCR data linked to the trading 

account number reported to the Commission through the DCMs' trade capture reports.5 

However, as the Commission is aware, a significant number of transactions executed on DCMs 

involve "give-ups." The account number used by the executing firm does not necessarily tie 

back to the account number used by the clearing firm for a customer's account. Similarly, the 

account number used by a firm to execute bunched orders may not tie back easily to the 

accounts for which the trades were executed, but simply identify the individual responsible for 

entering the trade into the system for execution. In developing an OCR, therefore, the 

Commission must take into consideration that discrete aspects of the data the Commission 

wishes to capture may be held at either the executing firm or the clearing firm 

Not All Information is Available 

Further, as noted above, not all of the information proposed to be collected through the OCR 

may be available. For example, the date that an account was "assigned to its current owners" 

or "assigned to its current controller(s)" may not be information that is created and maintained. 

More critically, perhaps, in stating that an objective of the OCR is to identify with certainty all 

accounts that are under common ownership or control, the Com1mssion implies that it would 

expect the OCR to include the taxpayer identification numbers of all individuals and entities 

that directly or indirectly own an account, i.e., shareholders, partners and limited liability 

company members. However~ as a general matter, this is not information that is currently 

collected. In this regard, we note the Form 40 does not require a reporting trader to list either 

Our member finns are also concerned about the potential security risk in maintaining all of the prescribed 

infonnation regarding customers in a single record. 

We also understand that some FCMs may recycle trading account numbers after they have been closed 

for a period of time. 
Mr. David A. Stawick 

August 1 7, 2009 

Page4 

its own taxpayer identification number or the taxpayer identification number of individuals or 

entities that have an interest of 10 percent or more in (or that guarantee) the account. 6 

Conclusion 

As we noted at outset of this letter, before the Commission proceeds with proposed rulemaking 

with respect to an account Ownership and Control Report, we believe it is essential that the 

Commission establish an inclusive, industry-wide committee calling on the expertise of all 

affected parties, including but not limited to FCMs, US contract markets and trade processing 

system vendors, to address significant operational and other issues regarding the appropriate 

design of the OCR. In light of the overwhelming burden that the proposal would place on 

FCMs, in both money and resources, it is critical that any such proposal be carefully tailored to 

provide only such information as will meaningfully assist the Commission and DCMs in 

performing their regulatory and self regulatory responsibilities. In this regard, for example, we 

question the necessity of collecting OCR data with respect to accounts that have not been 

designated "special accounts." FIA would be pleased to work with the Commission in 

addressing these concerns. 

We also question if now is the appropriate time to move forward with this proposal. Several 

bills pending before Congress, including the Administration's recently issued Over-the-Counter 

Derivatives Markets Act of 2009, would authorize the Commission to collect significantly 

more infonnation concerning the OTC derivatives markets and market participants than it 

currently receives. We expect that the Commission may want to coordinate the collection of 

futures-related data with OTC derivatives data. Further, the Commission and the Securities and 

Exchange Commission may be required to coordinate their recordkeeping and reporting 

requirements. In order to assure efficiency in the development of the necessary systems and to 

contain anticipated costs, the data that may be required to be submitted through the OCR 

should be fixed at the outset. Until the scope of its authority in this regard is clear, therefore, 

the Commission might consider whether action on the OCR be deferred. 

We appreciate the opportunity to submit these comments. If the Commission has any questions 

conceming the matters discussed in this letter, please contact Tammy Botsford, FIA's Vice 

President and Assistant General Counsel, at (202) 466-5460. 

6 Consequently, the Commission may have to consider amending its recordkeeping rules to require the 

creation and maintenance of data necessary to complete the OCR. 
Mr. David A. Stawick 

August 17, 2009 

Page 5 

cc: Honorable Gary Gensler, Chairman 

Honorable Michael Dunn, Commissioner 

Honorable Jill E. Sommers, Commissioner 

Honorable Bart Chilton, Commissioner 

Division of Market Oversight 

Richard Shilts, Director 

Sebastian Pujol Schott, Special Counsel 

Cody Alvarez, Attomey Advisor