[Code of Federal Regulations]
[Title 17, Volume 1]
[Revised as of April 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 17CFR1.57]

[Page 104-105]
 
              TITLE 17--COMMODITY AND SECURITIES EXCHANGES
 
             CHAPTER I--COMMODITY FUTURES TRADING COMMISSION
 
PART 1_GENERAL REGULATIONS UNDER THE COMMODITY EXCHANGE ACT--Table of Contents
 
Sec.  1.57  Operations and activities of introducing brokers.

    (a) Each introducing broker must:
    (1) Open and carry each customer's and option customer's account 
with a carrying futures commission merchant on a fully-disclosed basis: 
Provided, however, That an introducing broker which has entered into a 
guarantee agreement with a futures commission merchant in accordance 
with the provisions of Sec.  1.10(j) of this part must open and carry 
such customer's and option customer's account with such guarantor 
futures commission merchant on a fully-disclosed basis; and
    (2) Transmit promptly for execution all customer and option customer 
orders to:
    (i) A carrying futures commission merchant; or
    (ii) a floor broker, if the introducing broker identifies its 
carrying futures commission merchant and that carrying futures 
commission merchant is also the clearing member with respect to the 
customer's or option customer's order.
    (b) An introducing broker may not carry proprietary accounts, nor 
may an introducing broker carry accounts in foreign futures.
    (c) An introducing broker may not accept any money, securities or 
property (or extend credit in lieu thereof) to margin, guarantee or 
secure any trades or contracts of customers or option customers, or any 
money, securities or property accruing as a result of such trades or 
contracts: Provided, however, That an introducing broker may deposit a 
check in a qualifying account or forward a check drawn by a customer or 
option customer if:

[[Page 105]]

    (1) The futures commission merchant carrying the customer's or 
option customer's account authorizes the introducing broker, in writing, 
to receive a check in the name of the futures commission merchant, and 
the introducing broker retains such written authorization in its files 
in accordance with Sec.  1.31;
    (2) The check is payable to the futures commission merchant carrying 
the customer's or option customer's account;
    (3) The check is deposited by the introducing broker, on the same 
day upon which it is received, in a bank or trust company located in the 
United States in a qualifying account, or the check is mailed or 
otherwise transmitted by the introducing broker to the futures 
commission merchant on the same day upon which it is received;
    (4) For purposes of this paragraph (c), a qualifying account shall 
be deemed to be an account:
    (i) Which is maintained in an account name which clearly identifies 
the funds therein as belonging to commodity or option customers of the 
futures commission merchant carrying the customer's or option customer's 
account;
    (ii) For which the bank or trust company restricts withdrawals to 
withdrawals by the carrying futures commission merchant;
    (iii) For which the bank or trust company prohibits the introducing 
broker or anyone acting upon its behalf from withdrawing funds; and
    (iv) For which the bank or trust company provides the futures 
commission merchant carrying the customer's or option customer's account 
with a written acknowledgment, which the futures commission merchant 
must retain in its files in accordance with Sec.  1.31, that it was 
informed that the funds deposited therein are those of commodity or 
option customers and are being held in accordance with the provisions of 
the Act and these regulations.

[48 FR 35291, Aug. 3, 1983, as amended at 57 FR 23143, June 2, 1992]