Recordkeeping and Reporting
Five years, two years, and a way to produce it
CFTC Regulation 1.31 is the backbone: records must be kept for five years from creation, with the first two years readily accessible. "Readily accessible" means retrievable without unreasonable delay - a branch storing originals offsite must still produce them promptly when NFA or the CFTC asks. Electronic records must be preserved in a non-rewritable, non-erasable format or an accepted audit-trail format, with a verification process and, in some arrangements, an undertaking from a third-party technical consultant.
Know the substantive record rules: Regulation 1.35 for order tickets and records of orders (time received, account identification, terms, price, time of execution, plus records of oral orders and customer instructions); Regulation 1.37 for customer account records; Regulation 1.32 for daily transaction and segregation records; and Part 4 for CPO and CTA books. Add the registration reporting obligations: Form 7-R amendments within 30 days of a material change, and a Form 8-T within 30 days of an associated person's termination. Complaint records are a favorite exam topic - every written customer complaint must be logged, investigated, responded to, and retained.
Traps: confusing the five-year retention period with the two-year accessibility window; assuming an email is preserved just because it sits in a mailbox; and forgetting that branch records are the Member's records regardless of who created them.
Worked example: an AP keeps handwritten order memos in a desk drawer. The branch office manager must ensure those memos are captured in the firm's order record system and retained under Regulation 1.35 - and never destroyed once a complaint or investigation arises.
Rule of thumb: if it cannot be produced today, it is not readily accessible.