[Code of Federal Regulations]
[Title 17, Volume 1]
[Revised as of April 1, 2006]
From the U.S. Government Printing Office via GPO Access
[CITE: 17CFR41.41]

[Page 472-473]
 
              TITLE 17--COMMODITY AND SECURITIES EXCHANGES
 
             CHAPTER I--COMMODITY FUTURES TRADING COMMISSION
 
PART 41_SECURITY FUTURES PRODUCTS--Table of Contents
 
           Subpart E_Customer Accounts and Margin Requirements
 
Sec.  41.41  Security futures products accounts.

    Source: 67 FR 53171, Aug. 14, 2002, unless otherwise noted.


    (a) Where security futures products may be held. (1) A person 
registered with the Commission as a futures commission merchant pursuant 
to section 4f(a)(1) of the Commodity Exchange Act (``CEA'') and 
registered with the Securities and Exchange Commission (``SEC'') as a 
broker or dealer pursuant to section 15(b)(1) of the Securities Exchange 
Act of 1934 (``Securities Exchange Act'') (``Full FCM/Full BD'') may 
hold all of a customer's security futures products in a futures account, 
all of a customer's security futures products in a securities account, 
or some of a customer's security futures products in a futures account 
and other security futures products of the same customer in a securities 
account. A person registered with the Commission as a futures commission 
merchant pursuant to section 4f(a)(2) of the CEA (a notice-registered 
FCM) may hold a customer's security futures products only in a 
securities account. A person registered with the SEC as a broker or 
dealer pursuant to section 15(b)(11) of the Securities Exchange Act (a 
notice-registered broker-dealer) may hold a customer's security futures 
products only in a futures account.
    (2) A Full FCM/Full BD shall establish written policies or 
procedures for determining whether customer security futures products 
will be placed in a futures account and/or a securities account and, if 
applicable, the process by which a customer may elect the

[[Page 473]]

type or types of account in which security futures products will be held 
(including the procedure to be followed if a customer fails to make an 
election of account type).
    (b) Disclosure requirements. (1) Except as provided in paragraph 
(b)(2), before a futures commission merchant accepts the first order for 
a security futures product from or on behalf of a customer, the firm 
shall furnish the customer with a disclosure document containing the 
following information:
    (i) A description of the protections provided by the requirements 
set forth under section 4d of the CEA applicable to a futures account;
    (ii) A description of the protections provided by the requirements 
set forth under Securities Exchange Act Rule 15c3-3 and the Securities 
Investor Protection Act of 1970 applicable to a securities account;
    (iii) A statement indicating whether the customer's security futures 
products will be held in a futures account and/or a securities account, 
or whether the firm permits customers to make or change an election of 
account type; and
    (iv) A statement that, with respect to holding the customer's 
security futures products in a securities account or a futures account, 
the alternative regulatory scheme is not available to the customer in 
connection with that account.
    (2) Where a customer account containing an open security futures 
product position is transferred to a futures commission merchant, that 
futures commission merchant may instead provide the statements described 
in paragraphs (b)(1)(iii) and (b)(1)(iv) above no later than ten 
business days after the date the account is transferred.
    (c) Changes in account type. A Full FCM/Full BD may change the type 
of account in which a customer's security futures products will be held; 
provided, that:
    (1) The firm creates a record of each change in account type, 
including the name of the customer, the account number, the date the 
firm received the customer's request to change the account type, if 
applicable, and the date the change in account type became effective; 
and
    (2) The firm, at least ten business days before the customer's 
account type is changed:
    (i) Notifies the customer in writing of the date that the change 
will become effective; and
    (ii) Provides the customer with the disclosures described in 
paragraph (b)(1) above.
    (d) Recordkeeping requirements. The Commission's recordkeeping rules 
set forth in Sec. Sec.  1.31, 1.32, 1.35, 1.36, 1.37, 4.23, 4.33, 18.05 
and 190.06 of this chapter shall apply to security futures product 
transactions and positions in a futures account (as that term is defined 
in Sec.  1.3(vv) of this chapter). These rules shall not apply to 
security futures product transactions and positions in a securities 
account (as that term is defined in Sec.  1.3(ww) of this chapter); 
provided, that the SEC's recordkeeping rules apply to those transactions 
and positions.
    (e) Reports to customers. The Commission's reporting requirements 
set forth in Sec. Sec.  1.33 and 1.46 of this chapter shall apply to 
security futures product transactions and positions in a futures account 
(as that term is defined in Sec.  1.3(vv) of this chapter). These rules 
shall not apply to security futures product transactions and positions 
in a securities account (as that term is defined in Sec.  1.3(ww) of 
this chapter); provided, that the SEC's rules set forth in Sec. Sec.  
240.10b-10 and 240.15c3-2 of this chapter regarding delivery of 
confirmations and account statements apply to those transactions and 
positions.
    (f) Segregation of customer funds. All money, securities, or 
property held to margin, guarantee or secure security futures products 
held in a futures account, or accruing to customers as a result of such 
products, are subject to the segregation requirements of section 4d of 
the CEA and the rules thereunder.

[67 FR 58297, Sept. 13, 2002]