[Federal Register Volume 68, Number 96 (Monday, May 19, 2003)]
[Notices]
[Pages 27128-27129]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-12454]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-47825; File No. SR-NFA-2003-03]


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 Rules 
2-7 and 2-24 and Registration Rule 401: Proficiency Requirements for 
Security Futures Products

May 9, 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 April 22, 2003, 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 April 22, 2003, 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 May 2, 2003.

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

    Currently, the Interpretive Notice to NFA Compliance Rules 2-7 and 
2-24 and Registration Rule 401: Proficiency Requirements for Security 
Futures Products provides that new registrants can satisfy their 
proficiency requirements for security futures through training if they 
are registered no later than six months after the first retail, 
exchange-traded contract begins trading. The proposed rule change 
eliminates the six-month distinction and extends the training option to 
all new registrants who take the Series 3 examination and apply for 
registration before the revised examination becomes available. The 
proposed rule change also makes similar changes regarding the 
proficiency requirements for designated security futures principals.
    Section 15A(k) of the Exchange 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\ The 
interpretive notice regarding proficiency requirements for security 
futures products applies to these Members.
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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
    While the Interpretive Notice to NFA Compliance Rules 2-7 and 2-24 
and Registration Rule 401: Proficiency Requirements for Security 
Futures Products applies to all current registrants, it presently 
states that new registrants can qualify by training only if they are 
registered within six months after the first retail, exchange-traded 
security futures contract begins trading. At the time the interpretive 
notice was adopted, NFA staff assumed that six months, or until May 8, 
2003, would provide adequate time to update both the futures and the 
securities examinations. NASD, however, has recently informed NFA that 
its examinations will not be available until January 2004.
    Although NFA is prepared to meet the May 8 deadline, a regulatory 
disparity may occur if NFA incorporates security futures questions into 
its proficiency examinations before the securities industry does. For 
that reason, NFA proposes to postpone the use of the revised exams 
until NASD's examinations are ready.
    The current version of the interpretive notice incorporates the May 
8 deadline through its references to a date six months after security 
futures begin trading. The revised interpretive notice extends the 
training option to all new registrants who take the Series 3 and apply 
for registration before the revised examination becomes available. The 
revised interpretive notice was similarly changed for designated 
security futures principals.

[[Page 27129]]

2. Statutory Basis
    The rule change is authorized by, and consistent with, Section 
15A(k) 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 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,\6\ the proposed rule 
change became effective on May 2, 2003.
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    \6\ 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.\7\
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    \7\ 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 should refer to File No. 
SR-NFA-2003-03 and should be submitted by June 9, 2003.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(75).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 03-12454 Filed 5-16-03; 8:45 am]
BILLING CODE 8010-01-P