Beginning 10/7/10, broker-dealers must deliver the August 2010 Supplement along with the October 2002 Security Futures Risk Disclosure Statement to every customer having an account approved for such trading.  Alternatively, current Statement to each customer at or prior to the time the customer’s account is approved for trading security futures. Thereafter, each new or revised Statement shall be distributed not later than the time a confirmation of a transaction is delivered to each customer who enters into a security futures transaction.

FINRA Rule 2370(b)(11)(A) governs the above requirement.  The Statement contains general disclosures on the characteristics and risks of security futures.  The Supplement adds new disclosure to accommodate proposed changes by OneChicago, LLC to list a class of security futures for which adjustments will be made for ordinary dividends.

To comply with FINRA rule requirements, firms may distribute the Supplement in various ways, including, but not limited to, one of the following:

• conducting a mass mailing of the Supplement to all of its customers approved to trade security futures who have already received the Statement; or
• distributing the Supplement to a customer who has already received the Statement not later than the time a confirmation of a transaction is delivered to each customer that enters into a security futures transaction.

Firms are reminded they may electronically transmit documents - including the Statement and Supplement - provided the firm adheres to the standards contained in the May 1996 and October 1995 SEC Releases, and as discussed in NtM 98-3.  Firms also may transmit the Statement and Supplement to customers who have consented to e-delivery through the use of a hyperlink.

For further details, click onto:  [ FINRA InfoNote, 9/7 ] and/or [ August 2010 Supplement ] and [ 2002 Statement ]