[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: 17CFR155.4]

[Page 571-572]
 
              TITLE 17--COMMODITY AND SECURITIES EXCHANGES
 
             CHAPTER I--COMMODITY FUTURES TRADING COMMISSION
 
PART 155_TRADING STANDARDS--Table of Contents
 
Sec.  155.4  Trading standards for introducing brokers.

    (a) Each introducing broker shall, at a minimum, establish and 
enforce internal rules, procedures and controls to:
    (1) Insure, to the extent possible, that each order received from a 
customer or from an option customer which is executable at or near the 
market price is transmitted to the futures commission merchant carrying 
the account of the customer or option customer before any order in any 
future or

[[Page 572]]

in any commodity option in the same commodity for any proprietary 
account, any other account in which an affiliated person has an 
interest, or any account for which an affiliated person may originate 
orders without the prior specific consent of the account owner, if the 
affiliated person has gained knowledge of the customer's or option 
customer's order prior to the transmission to the floor of the 
appropriate contract market of the order for a proprietary account, an 
account in which the affiliated person has an interest, or an account in 
which the affiliated person may originate orders without the prior 
specific consent of the account owner; and
    (2) Prevent affiliated persons from placing orders, directly or 
indirectly, with any futures commission merchant in a manner designed to 
circumvent the provisions of paragraph (a)(1) of this section.
    (b) No introducing broker or any of its affiliated persons shall:
    (1) Disclose that an order of another person is being held by the 
introducing broker or any of its affiliated persons, unless such 
disclosure is necessary to the effective execution of such order or is 
made at the request of an authorized representative of the Commission, 
the contract market on which such order is to be executed, or a futures 
association registered with the Commission pursuant to section 17 of the 
Act; or
    (2)(i) Knowingly take, directly or indirectly, the other side of any 
order of another person revealed to the introducing broker or any of its 
affiliated persons by reason of their relationship to such other person, 
except with such other persons's prior consent and in conformity with 
contract market rules approved by or certified to the Commission.
    (ii) In the case of a customer who does not qualify as an 
``institutional customer'' as defined in Sec.  1.3(g) of this chapter, 
an introducing broker must obtain the customer's prior consent through a 
signed acknowledgment, which may be accomplished in accordance with 
Sec.  1.55(d) of this chapter.
    (c) No affiliated person of an introducing broker shall have an 
account, directly or indirectly, with any futures commission merchant 
unless:
    (1) Such affiliated person receives written authorization to 
maintain such an account from a person designated by the introducing 
broker with which such person is affiliated with responsibility for the 
surveillance over such account pursuant to paragraph (a)(2) of this 
section; and
    (2) Copies of all statements for such account and of all written 
records prepared by such futures commission merchant upon receipt of 
orders for such account pursuant to Sec.  155.3(c)(2) are transmitted on 
a regular basis to the introducing broker with which such person is 
affiliated.

[48 FR 35304, Aug. 3, 1983, as amended at 66 FR 53523, Oct. 23, 2001; 70 
FR 5924, Feb. 4, 2005]