U.S. COMMODITY FUTURES TRADING COMMISSION

Three Lafayette Centre 

1155 21st Street, NW, Washington, DC 20581 

Telephone: (202) 418-5430 

Facsimile: (202) 418-5547 

aradhakrishnan@cftc.gov

Division of Clearing and 

Intermediary Oversight

Ananda Radhakrishnan 

Director 

CFTC letter No. 07-14 

July 18, 2007 

Interpretation 

Division of Clearing and Intermediary Oversight 

 Re: Request for Interpretive Letter Regarding Regulation 1.33

Dear : 

 This is in response to your letter dated April 27, 2007, to the Division of Clearing and 

Intermediary Oversight (“Division”), in which you request, on behalf of (the “Company”), a 

registered futures commission merchant (“FCM”), an Interpretive or No Action Letter regarding 

Commission Regulation 1.33,1 which requires an FCM to send to its customers certain account 

statements and written records relating to the customers’ accounts (the “Account Statements”)2. 

Specifically, you request that the Company be considered in compliance with the requirement 

that an FCM transmit to its customers the Account Statements specified in Regulation 1.33 

where the customer has been provided electronic access via a password-protected website to the 

information required to be transmitted. 

 Based upon the representations made in your letter, we understand the relevant facts to be 

as follows. The Company is a registered FCM, that currently offers its customers the option of 

receiving their statements via electronic mail (“email”). The statements provided electronically 

contain all the data required by Commission Regulation 1.33. 

 The Company intends to alter the current method of providing its customers with account 

information by providing each customer opting to receive statements via email with a unique 

username and password. Whenever a new Account Statement is generated by the Company, the 

customer would receive an email notification, which includes a link in the email document that 

would direct the customer to a password-protected portion of its website. The customer would 

then enter his or her username and password, and would be able to view the most-recent Account 

 

1

 Commission regulations referred to in this letter are found at 17 C.F.R. Ch. I (2007). 

2

 The Account Statements will include monthly and confirmation statements that contain 

the information specified in Commission Regulation 1.33. 
 Page 2 of 3 

Statement. The revised system would also provide customers easier access to archived versions 

of their previous Account Statements.3 In the method proposed by the Company, customers that 

opt for the new method will receive the same information that would be included in a paper 

statement or in the emailed statement provided using the Company’s current distribution method. 

 

 The Commission adopted, as part of an overhaul of several regulations relating to 

intermediaries of commodity interest transactions, a new paragraph (g) or Regulation 1.33 

governing electronic transmission of account statements. The Commission’s intention in 

adopting these several regulations in general was to streamline and eliminate unnecessary 

regulation for regulated entities, in keeping with one of the purposes of the Commodity Futures 

Modernization Act.4

 The Commission’s intention in adopting new paragraph (g) of Regulation 

1.33 specifically was to codify its previous June 1997 Advisory5

 relating to the electronic 

transmission of account statements.6

 To preserve flexibility and accommodate advances in technology, the text of Commission 

Regulation 1.33(g) does not specify which kinds of “electronic media” are available as means of 

distributing customer Account Statements. The June 1997 Advisory made clear, however, that 

electronic media encompassed facsimiles, electronic mail, internet world wide websites and 

computer networks.7

 

 

3

 In addition to the most-recent statement, customers accessing their account statements 

through the new system, after entering their username and password, will have the ability to 

access all previous statements generated for their account. They will not need to open up prior 

emails to view prior account statements, as is required by the current method. 

4

 Pub. L. No. 106-554, 114 Stat. 2763, §2(2) (December 21, 2000). 

5

 62 Fed. Reg. 31507 (June 10, 1997). The Advisory required that customers consent to 

the delivery method and that the consent be based on “sufficient information about the about the 

manner and costs of delivery to constitute informed consent.” The factors considered in 

determining informed consent are “(1) [t]he electronic medium or source through which the 

Statements will be delivered; (2) the period during which the consent will be effective (which 

can be until further notice); (3) the information that will be delivered using such means (a 

customer might, for example, request that only daily confirmations and purchase-and-sale 

statements be delivered electronically and still wish to receive a monthly statement by mail); (4) 

the costs, if any, that will be charged to the customer specific to electronic delivery of the 

Statements; and (5) the customer's right to revoke at any time the consent to receive statements 

solely by means of electronic medium.”

6

 66 Fed. Reg. 53510, 53514 (October 23, 2001). 

7

 62 Fed. Reg. 31507, at 31508. 
 Page 3 of 3 

 The revised notification method will provide customers with an email each time a new 

statement is generated. With respect to whether the revised method is unduly burdensome, 

because customers will have to click a link to a website and enter their usernames and passwords 

to have full access to their statements, it is slightly more burdensome than the current method, 

which provides the data in the account statement in the text of the email. The extra layer of 

security afforded to customers by requiring a password to view the Account Statement, however, 

mitigates this burden. Easier access to prior Account Statements is also a mitigating factor. It 

also appears to be a reasonable precaution for the integrity and security of statements transmitted 

electronically.8

 

 

 Based on the foregoing, the Division has determined that the Company’s planned 

revision of the program providing for electronic transmission of Account Statements is consistent 

with Regulation 1.33(g), subject to the conditions that the Company: (1) receive a written 

statement from the customer acknowledging and agreeing to the foregoing arrangement; and (2) 

promptly furnish to the customer, upon its request, paper versions of the customer’s Account 

Statements. 

 

 The views expressed in this letter are based on the representations you have made to us 

and is subject to the conditions stated above, and represent the views of the Division of Clearing 

and Intermediary Oversight. They do not necessarily represent the views of the Commission or 

any other staff unit of the Commission. Division’s opinion does not excuse the Company from 

compliance with any other applicable requirements contained in the Act or the Commission’s 

regulations thereunder. Any different, changed or omitted facts or conditions might require us to 

reach a different conclusion. In this regard, we request that you notify us immediately in the 

event the facts presented change in any way from those represented to us. 

 If you have any questions concerning this correspondence, please contact Deputy 

Director, Lawrence B. Patent at (202) 418-5439, or Special Counsel, Peter Sanchez at (202) 418-

5237. 

 Very truly yours, 

 

 Ananda Radhakrishnan 

 Director 

 

8

 Id. at 31510.