[Federal Register Volume 68, Number 58 (Wednesday, March 26, 2003)]
[Notices]
[Pages 14732-14733]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-7112]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-47539; File No. SR-NFA-2003-02]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the National Futures 
Association Regarding the Interpretive Notice to NFA Compliance Rule 2-
9 Concerning Ethics Training Requirements

March 19, 2003.
    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 March 6, 2003, the National Futures Association (``NFA'') filed 
with the Securities and Exchange Commission (``SEC'' or ``Commission'') 
the proposed rule change 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 change 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 March 5, 2003, NFA submitted the proposed rule change to the 
CFTC for approval. The CFTC has not yet given such approval.

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

    The proposed rule change adopts a new Interpretive Notice to NFA 
Compliance Rule 2-9 Concerning Ethics Training Requirements. The 
Interpretive Notice expands on the CFTC's Statement of Acceptable 
Practices for ethics training and provides additional guidance to firms 
in meeting their ethics training obligations.
    Section 15A(k) of the Act \3\ makes NFA a national securities 
association for 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\ Some of the firms that 
are affected by this rule change are broker-dealers registered under 
section 15(b)(11).
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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
    During examinations of its Member firms, NFA asks for feedback on 
any areas in which Members may need more guidance. One of the areas 
that has recently required some clarification is ethics training. In 
2001, the CFTC issued a Statement of Acceptable Practices 
(``Statement'') for ethics training. This Statement was designed to 
allow flexibility in the format, frequency and providers of ethics 
training, giving each firm the freedom to tailor training to suit their 
own operations. Also, firms are no longer

[[Page 14733]]

required to submit ethics training information to NFA. Because the CFTC 
Statement is general in nature, Member firms have indicated that they 
would like NFA to provide some type of additional guidance.
    In response, NFA's Board of Directors (``Board'') adopted the 
proposed Interpretive Notice to assist NFA Members in interpreting the 
changes to the ethics training rules. The Interpretive Notice outlines 
these changes and discusses them in more detail than the CFTC's 
Statement. This guidance comes in the form of an Interpretive Notice 
because the Board considers ethics training to be an element of a 
Member's supervisory obligations under NFA Compliance Rule 2-9.
2. Statutory Basis
    The rule change is authorized by, and consistent with, section 
15A(k)(2)(D) of the Act.\5\
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    \5\ 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 change to the membership for comment. 
NFA did not receive comment letters concerning the rule change.

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

    The proposed rule change is not effective because the CFTC has not 
approved the proposed rule change.
    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.\6\
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    \6\ 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 
website (http://www.sec.gov). All submissions should refer to File No. 
SR-NFA-2003-02 and should be submitted by April 16, 2003.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(75).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-7112 Filed 3-25-03; 8:45 am]
BILLING CODE 8010-01-P