7.2.1. Know Your Customer
To comply with the NFA’s know your customer rule, the futures broker must generally obtain and record the customer’s full name, address, and principal occupation or business. It must also record the customer’s previous investment and futures trading experience, annual income, and net worth (or net assets). For customers who are individuals rather than businesses, the firm must also note the customer’s age or date of birth.
If the NFA member firm is also a FINRA member, this personal information is sufficient. If it is not a FINRA member, the following additional information is required:
• The new account’s intended purpose: whether for hedging or speculation
• The customer’s current employment status
• The customer’s estimated liquid net worth
• The customer’s marital status and number of dependents
Each member must make or obtain a record of this information at the time it is gathered. A member may rely on an individual customer as the sole source of the customer information without further verification if it forwards the background and financial information to the customer to confirm its accuracy within 15 days after the account has been approved. If the customer declines to provide the information, that refusal also must be recorded.
A member may generally approve a new customer account only upon the