[Federal Register Volume 67, Number 184 (Monday, September 23, 2002)]
[Notices]
[Pages 59587-59589]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-24090]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-46502; File No. SR-NFA-2002-04]


Self-Regulatory Organizations; Notice of Filing and Effectiveness 
of Proposed Rule Change by the National Futures Association Concerning 
Proficiency Requirements

September 16, 2002.
    Pursuant to section 19(b)(7) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-7 under the Act,\2\ notice is hereby given 
that on August 28, 2002, the National Futures Association (``NFA'') 
filed with the Securities and Exchange Commission (``SEC'' or 
``Commission'') the proposed rule changes described in Items I, II, and 
III below, which Items have been prepared by the NFA. The Commission is 
publishing this notice to solicit comments on the proposed rule changes 
from interested persons. NFA also has filed the proposed rule change 
with the Commodity Futures Trading Commission (``CFTC'').
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    \1\ 15 U.S.C. 78s(b)(7).
    \2\ 17 CFR 240.19b-7.
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    On August 15, 2002, NFA requested that the CFTC make a 
determination that review of the proposed rule change is not necessary. 
The CFTC made such a determination on August 26, 2002.

I. Self-Regulatory Organization's Description of the Proposed Rule 
Change

    Section 15A(k) of the Act \3\ makes NFA a national securities 
association for

[[Page 59588]]

the limited purpose of regulating the activities of members who are 
registered as brokers or dealers in security futures products under 
section 15(b)(11) of the Act.\4\ NFA proposes an interpretive notice 
regarding proficiency requirements for security futures products will 
apply to these Members. The proposed interpretive notice regarding 
proficiency requirements for security futures products describes the 
conditions under which registrants can substitute training for testing.
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    \3\ 15 U.S.C. 78o-3(k).
    \4\ 15 U.S.C. 78o(b)(11).
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II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    NFA has prepared statements concerning the purpose of, and basis 
for, the proposed rule change, burdens on competition, and comments 
received from members, participants, and others. The text of these 
statements may be examined at the places specified in Item IV below. 
These statements are set forth in Sections A, B, and C below.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Section 15A(k)(2)(D) of the Act requires NFA to ``have rules that 
ensure that members and natural persons associated with members meet 
such standards of training, experience, and competence necessary to 
effect transactions in security futures products and are tested for 
their knowledge of securities and security futures products.'' \5\ NFA 
is in the process of updating the Series 3 examination to include 
questions relating to security futures products. NFA is also in the 
process of updating the Series 30 examination to include questions 
regarding security futures for persons who are designated security 
futures principals under NFA Compliance Rule 2-7(b). Until the 
examinations are finalized, individuals will be allowed to meet the 
proficiency requirements by taking an appropriate training course 
before engaging in activities involving security futures products. The 
proposed interpretive notice describes the conditions under which these 
individuals can substitute training for testing.
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    \5\ 15 U.S.C. 78o-3(k)(2)(D).
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    NFA, in partnership with the National Association of Securities 
Dealers and the Institute for Financial Markets, has developed a Web-
based training program that will satisfy the training requirement. The 
program can be accessed through NFA's Web site, and there is no charge 
for completing the training program.
    The proposed interpretive notice explains that current NFA Members 
and Associates will be able to satisfy their proficiency requirements 
for security futures by taking any training program that covers the 
subject matter included in a content outline that can be found on NFA's 
web site. New registrants can also qualify through training if they are 
registered no later than six months after the first retail, exchange-
traded contract begins trading.
    The proposed interpretive notice explains that in order to qualify 
as a designated security futures principal, current supervisors may 
take a portion of the training program devoted to supervisory issues as 
well as the portions intended for all Associates within six months 
after the first retail, exchange-traded contract begins trading. After 
the six-month period, individuals may qualify as a security futures 
principal by taking the training program in lieu of taking a 
supervisory proficiency examination, provided those individuals are 
qualified to act as a branch office manager no later than six months 
after the first retail, exchange-traded contract begins trading.
    As indicated above, the proposed interpretive notice grandfathers 
in current registrants and those who take the Series 3 and/or Series 30 
examination within six months after security futures begin trading, 
provided they take an appropriate training program before they begin 
soliciting for security futures transactions or supervising security 
futures activities. The grandfather provision would expire on December 
31, 2006. Registrants who subsequently decide to engage in security 
futures activities will be required to first take the relevant 
examination.
    The proposed interpretive notice states that NFA Members and 
Associates are not required to notify NFA that they have completed a 
training program, but Members must be able to demonstrate to NFA during 
an audit that those registered individuals who are engaging in security 
futures activities have completed the necessary training.
2. Statutory Basis
    The rule change is authorized by, and consistent with, section 
15A(k) of the Act.\6\
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    \6\ 15 U.S.C. 78o-3(k).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The rule change will not impose any burden on competition that is 
not necessary or appropriate in furtherance of the purposes of the Act 
and the Commodity Exchange Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    NFA did not publish the rule changes to the membership for comment. 
NFA did not receive comment letters concerning the rule changes.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Pursuant to section 19(b)(7)(B) of the Act,\7\ the proposed rule 
change became effective on August 26, 2002.
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    \7\ 15 U.S.C. 78s(b)(7)(B)
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    Within 60 days of the date of effectiveness of the proposed rule 
change, the Commission, after consultation with the CFTC, may summarily 
abrogate the proposed rule change and require that the proposed rule 
change be refiled in accordance with the provisions of section 19(b)(1) 
of the Act.\8\
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    \8\ 15 U.S.C. 78s(b)(1).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change conflicts with the Act. Persons making written submissions 
should file nine copies of the submission with the Secretary, 
Securities and Exchange Commission, 450 Fifth Street, NW., Washington, 
DC 20549-0609. Comments also may be submitted electronically to the 
following e-mail address: [email protected]. Copies of the 
submission, all subsequent amendments, all written statements with 
respect to the proposed rule change that are filed with the Commission, 
and all written communications relating to the proposed rule change 
between the Commission and any person, other than those that may be 
withheld from the public in accordance with the provisions of 5 U.S.C. 
552, will be available for inspection and copying in the Commission's 
Public Reference Room. Copies of these filings also will be available 
for inspection and copying at the principal office of NFA. 
Electronically submitted comments will be posted on the Commission's 
Web site (http://www.sec.gov). All submissions

[[Page 59589]]

should refer to File No. SR-NFA-2002-04 and should be submitted by 
October 15, 2002.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\

    \9\ 17 CFR 200.30-3(a)(75).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-24090 Filed 9-20-02; 8:45 am]
BILLING CODE 8010-01-P