[Federal Register Volume 77, Number 167 (Tuesday, August 28, 2012)]
[Rules and Regulations]
[Pages 51898-51910]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-20962]


=======================================================================
-----------------------------------------------------------------------

COMMODITY FUTURES TRADING COMMISSION

17 CFR Part 3

RIN 3038-AC96


Registration of Intermediaries

AGENCY: Commodity Futures Trading Commission.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Commodity Futures Trading Commission (Commission) is 
adopting regulations to further implement new statutory provisions 
enacted by Title VII of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act (Dodd-Frank Act) regarding registration of 
intermediaries. Specifically, the Commission is adopting certain 
conforming amendments to the Commission's regulations regarding the 
registration of intermediaries, consistent with other Commission 
rulemakings issued pursuant to the Dodd-Frank Act, and other non-
substantive, technical amendments to its regulations.

DATES: Effective October 29, 2012.

FOR FURTHER INFORMATION CONTACT: Andrew Chapin, Associate Director, 
Division of Swap Dealer and Intermediary Oversight, (202) 418-5465, 
[email protected]; or Claire Noakes, Attorney Advisor, Division of Swap 
Dealer and Intermediary Oversight, (202) 418-5444, [email protected]; 
Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st 
Street NW., Washington, DC 20581.

SUPPLEMENTARY INFORMATION: 

I. Introduction

    On July 21, 2010, President Obama signed the Dodd-Frank Act.\1\ 
Title VII of the Dodd-Frank Act amended the Commodity Exchange Act 
(CEA) \2\ to establish a comprehensive new regulatory framework to 
reduce risk, increase transparency, and promote market integrity within 
the financial system by, among other things: (1) Providing for the 
registration and comprehensive regulation of swap dealers (SDs) and 
major swap participants (MSPs); (2) imposing clearing and trade 
execution requirements on standardized derivative products; (3) 
creating rigorous recordkeeping and real-time reporting regimes; and 
(4) enhancing the Commission's rulemaking and enforcement authorities 
with respect to all registered entities and intermediaries subject to 
the Commission's oversight.
---------------------------------------------------------------------------

    \1\ See Dodd-Frank Act, Public Law 111-203, 124 Stat. 1376 
(2010). The text of the Dodd-Frank Act may be accessed at: http://www.cftc.gov/ucm/groups/public/@swaps/documents/file/hr4173_enrolledbill.pdf.
    \2\ 7 U.S.C. 1 et seq.
---------------------------------------------------------------------------

    As discussed below, the regulations the Commission is adopting 
today concern conforming and technical amendments to part 3 governing 
the registration of intermediaries. These final regulations are based 
in large part on the Commission's proposed regulations regarding part 3 
(Proposal).\3\ The conforming amendments largely consist of adding 
references, where appropriate, to SDs, MSPs and swap execution 
facilities (SEFs). In addition, the adopted regulations contain 
modernizing and technical amendments to part 3 in anticipation of an 
influx of new registrants. Further, the adopted regulations clarify or 
update definitions, outdated cross-references to other regulations, and 
other typographical errors.
---------------------------------------------------------------------------

    \3\ 76 FR 12888, Mar. 9, 2011.
    \4\ The comments the Commission received on the Proposal are 
currently available on the Commission's Web site.
---------------------------------------------------------------------------

II. Comments \4\ and Responses

A. In General

    In response to the Proposal, the Commission received four comments 
from the Futures Industry Association (FIA), the National Futures 
Association (NFA), and two individuals, Chris Barnard and Bill Nolan. 
In addition, the Commission also received comments relevant to the 
Proposal in a global comment letter submitted by a U.S. investor and a 
petition for exemption submitted pursuant to Section 4(c) of the CEA 
\5\ by a group of trade industry associations.\6\ The commenters 
generally supported the Commission's efforts to update and modernize 
part 3 consistent with the regulatory developments set forth in the 
Dodd-Frank Act. In consideration of the comments received,\7\ and 
unless specifically addressed below in the section-by-section analysis, 
the Commission adopts the final regulations as proposed.
---------------------------------------------------------------------------

    \5\ 7 U.S.C. 6(c).
    \6\ The Commission determined that the issues raised in the 
global comment letter with respect to addressing the types of 
activities that would cause a market participant to be deemed an 
introducing broker engaged in swap-related activities were outside 
of the scope of the Proposal, and therefore is not addressing them 
in this final rule. Likewise, the petition submitted by the trade 
industry associations cited the Proposal as an example of amendments 
that would likely not be effective in time for a July 16, 2011 
compliance deadline. Those concerns were addressed when the 
Commission granted related relief and extended the effective and/or 
compliance date applicable to many Dodd-Frank requirements. See the 
second amended version of the effective date order at 77 FR 41260, 
July 13, 2012.
    \7\ NFA requested that the Commission specifically list the 
chief compliance officer of a registered foreign exchange dealer in 
the definition of principal. The Commission addressed this request 
in another rulemaking, wherein chief compliance officer is listed as 
an example of a principal of a registrant. See 77 FR 20200, Apr. 3, 
2012.
---------------------------------------------------------------------------

B. Section 3.1--Definitions

    Section 3.1 proposed alterations to the scope of persons who, by 
reason of their ownership of securities of a registrant, must be listed 
as a principal. The Commission proposed to narrow the current category 
of persons in Sec.  3.1(a)(2)(i) to only those individuals who are the 
owners or are entitled to vote or have the power to sell or direct the 
sale of 10 percent or more of the outstanding shares of any class of 
equity securities, other than non-voting securities. The Commission 
intended to narrow the scope of the provision because the existing 
provision was over-inclusive, in that it captured individuals without 
the ability to influence a company's actions, such as owners of 10% of 
a class of preferred stock. However, upon further reflection, the 
Commission is concerned that the Proposal might, in other ways, be 
under-inclusive, in that it would fail to capture an owner who might 
indirectly have the power--such as through a membership agreement--to 
dictate upfront the entity's activities that are subject to regulation 
by the Commission. Consequently, in order to strike the right balance 
between the over-inclusive existing provision and the under-inclusive 
proposed language, the Commission is modifying Sec.  3.1(a)(2)(i) to 
include individuals who have the power to exercise a controlling 
influence over the entity's activities that are subject to regulation 
by the Commission.\8\
---------------------------------------------------------------------------

    \8\ In comparison, broker-dealers regulated by the Securities 
and Exchange Commission are required to disclose on Form BD that is 
filed with the Financial Industry Regulatory Authority any person 
not otherwise named on Schedule A as a direct owner or Schedule B as 
an indirect owner who nonetheless controls the management or 
policies of the applicant through agreement or otherwise. See http://www.sec.gov/about/forms/formbd.pdf.

---------------------------------------------------------------------------

[[Page 51899]]

C. Section 3.10--Registration of Futures Commission Merchants, Retail 
Foreign Exchange Dealers, Introducing Brokers, Commodity Trading 
Advisors, Commodity Pool Operators, Swap Dealers, Major Swap 
Participants, and Leverage Transaction Merchants. Section 3.11--
Registration of Floor Brokers and Floor Traders. Section 3.12--
Registration of Associated Persons of Futures Commission Merchants, 
Retail Foreign Exchange Dealers, Introducing Brokers, Commodity Trading 
Advisors, Commodity Pool Operators and Leverage Transaction Merchants

    Section 3.10 generally sets forth the registration requirements for 
various Commission registrants. Section 3.11 generally sets forth the 
registration requirements for floor brokers and floor traders. Section 
3.12 generally sets forth the registration requirements for natural 
persons associated with a Commission registrant in certain capacities, 
referred to as associated persons (APs).
    With respect to APs, the Commission proposed to amend Sec.  3.10 to 
add a new paragraph (c)(5) to clarify that a person employed by either 
an SD or a MSP and acting as its AP is not required to separately 
register as an SD or MSP, respectively, solely arising out of the 
person's activities as an AP. The Commission sought public comment as 
to whether this exemption is necessary to clarify the registration 
responsibilities of employees, in light of the current absence of a 
registration requirement as an AP of an SD or an MSP, and in light of 
the definition requiring persons who engage in certain swap activities 
to register as an SD or an MSP.\9\ FIA and Chris Barnard were 
supportive of this clarification on the grounds that it provided 
regulatory certainty. The Commission is adopting the language in new 
paragraph (c)(5) with a change in the language to reflect that it is 
not appropriate to consider the AP's activities as an AP of an SD for 
the purpose of determining whether the person is an SD.
---------------------------------------------------------------------------

    \9\ See 77 FR 30596, May 23, 2012.
---------------------------------------------------------------------------

    With respect to intermediaries, current Sec.  3.10(c)(2) and (3) 
provides exemptions from registration as a futures commission merchant 
(FCM) for foreign brokers and other foreign intermediaries conducting 
activities in commodity interest transactions on designated contract 
markets (DCMs) solely on behalf of customers located outside the U.S. 
The Commission proposed to amend this section to expand these 
registration exemptions to foreign brokers and foreign intermediaries 
engaged in commodity interest transactions solely on behalf of non-U.S. 
customers executed on a SEF and cleared on a designated clearing 
organization through the customer omnibus account maintained with a 
registered FCM. FIA supported the Commission's proposal to align 
registration exemptions for foreign intermediaries across DCMs and 
SEFs. The Commission also sought comment as to whether it should expand 
such exemption to swap transactions executed bilaterally, and FIA 
supported this suggestion as well. Finally, the Commission sought 
comment as to whether any expansion should distinguish between 
bilateral swap transactions that occur within the U.S. and those that 
occur abroad. The Commission did not receive any comments regarding 
such a distinction. Therefore, the Commission is amending Sec.  
3.10(c)(2) and (3) to extend the registration exemption to commodity 
interest transactions executed bilaterally, on or subject to the rules 
of a DCM, or on or subject to the rules of a SEF, that are submitted 
for clearing on an omnibus basis through a registered FCM.
    As proposed, Sec.  3.11 pertaining to registration of floor brokers 
and floor traders contained a series of technical changes, such as 
consolidating an exemption found in Sec.  3.4 and removing references 
to DTEFs. Subsequently, the Commission has promulgated the further 
definition of the term ``swap dealer'' \10\ which, among other things, 
excludes certain swaps entered into by registered floor traders from 
the SD determination. Specifically, Sec.  1.3(ggg)(6)(iv) states that 
``[i]n determining whether a person is a swap dealer, each swap that 
the person enters into in its capacity as a floor trader as defined by 
section 1a(23) of the Act or on or subject to the rules of a swap 
execution facility shall not be considered for the purpose of 
determining whether the person is a swap dealer,'' provided that the 
person is registered as a floor trader pursuant to Sec.  3.11 and 
otherwise satisfies other conditions with respect to its trading, 
including certain requirements as if it were an SD.\11\
---------------------------------------------------------------------------

    \10\ 77 FR 30596, May 23, 2012.
    \11\ 17 CFR 1.3(ggg)(6)(iv) (emphasis added). Section 1a(23) of 
the CEA restricts floor traders to the offer and sale of contracts 
``solely for such person's own account.'' 7 U.S.C. 1a(23).
---------------------------------------------------------------------------

    Given that legal entities, in addition to natural persons, may seek 
to avail themselves of the exclusion set forth above, the Commission 
therefore is adding a reference to Form 7-R in Sec.  3.11. Form 7-R, as 
the application for registration as an intermediary, is the appropriate 
form for NFA to process an entity's application for registration as a 
floor trader engaged in swaps activities. Additionally, references to 
SEFs are being added throughout Sec.  3.11 as one of the two categories 
of facilities for which floor traders in swaps will be granted trading 
privileges. Although these additions were omitted in the Proposal, the 
Commission believes that insertion of the appropriate reference to the 
type of registration form, and the type of facility, that would allow 
the NFA to properly process applications for registration of floor 
traders engaged in swaps activities are conforming changes to the 
registration rule that are necessary to implement the SD definition.
    Consequently, the Commission is adopting additional technical 
modifications in Sec.  3.21 to address the processing of fingerprints 
for principals of a floor trader that is a non-natural person, as well 
as in Sec.  3.33 to reflect the use of Form 7-W for a request for 
withdrawal from a floor trader that is a non-natural person. The 
Commission is also adopting other technical modifications in Sec. Sec.  
3.30 and 3.40 to reflect the registration of legal entities as floor 
traders,\12\ and in Sec. Sec.  3.2, 3.4, 3.42, 3.56, 3.60 and 3.64 to 
add references to SEFs.
---------------------------------------------------------------------------

    \12\ In Sec.  3.40, the provision for temporary licenses is 
limited to individual floor traders because this provision is 
applicable only to natural persons (such as APs addressed in Sec.  
3.40(a)).
---------------------------------------------------------------------------

    The Commission proposed to amend Sec.  3.12(h)(1) to provide that a 
person is not required to register as an AP in any capacity if such 
person is registered in one of the other enumerated categories, 
including an SD or MSP. FIA agreed with the Commission that it is 
highly improbable that an individual, rather than an entity, would 
register as an SD and MSP, but supported the Commission's proposal in 
light of the regulatory certainty that it provides. Accordingly, the 
Commission is adopting Sec.  3.12(h)(1) as proposed.

D. Section 3.31--Deficiencies, Inaccuracies, and Changes To Be 
Reported. Section 3.33--Withdrawal From Registration

    Section 3.31 sets forth procedural requirements for a registrant to 
update and/or correct information previously provided to the Commission 
and the NFA. The NFA is a registered futures association (RFA) to which 
the Commission has delegated certain registration functions.\13\ 
Currently, NFA

[[Page 51900]]

exercises discretion in determining whether changes to the information 
originally filed on the registrant's Form 7-R or 8-R,\14\ including its 
legal name, form of organization, and list of principals, would require 
a registrant to withdraw and re-register or, in the alternative, amend 
its Form 7-R or 8-R. The NFA's discretion is subject only to the 
requirement to withdraw and re-register set forth in Sec.  3.31(a)(1) 
where a registrant is reporting a change in the form of organization 
from or to a sole proprietorship, and the safe-harbor from re-
registration set forth in Sec.  3.31(a)(3).
---------------------------------------------------------------------------

    \13\ Section 17(o)(1) of the CEA, 7 U.S.C. 21(o)(1), provides 
that the Commission may require an RFA to perform certain Commission 
registration functions, in accordance with the CEA and the rules of 
the RFA.
    \14\ Form 7-R is the Commission's application for registration 
as an intermediary or floor broker that is a non-natural person and 
application for NFA membership, while Form 8-R is the Commission's 
application for registration as an AP, floor broker, or individual 
floor trader, as well as the application for listing as a principal 
of a registrant.
---------------------------------------------------------------------------

    Among other changes set forth in the Proposal, the Commission 
proposed: (1) To adopt Sec.  3.31(a)(5) to require re-registration in 
the event of a change in name or form of organization and a change in 
principal, while preserving the existing safe harbor in Sec.  
3.31(a)(3) in the event that there is no change in principal and the 
registrant will be liable for its predecessor organization. The 
Commission specifically requested comment on whether the additional 
transparency under the new provisions of Sec.  3.31 is beneficial and 
necessary to fulfill the Commission's mandate to protect customers, and 
whether the existing safe harbors from re-registration should be 
maintained. In response to the Commission's request, NFA and FIA 
opposed the proposed re-registration requirements as unnecessary, while 
Bill Nolan supported the proposed re-registration requirements as 
necessary to ensure that the existing process is not abused by 
registrants to the detriment of customers.
    In particular, the NFA challenged the proposed amendments to Sec.  
3.31 on the following grounds: (1) It will be more difficult for 
members of the public to uncover a ``new'' firm's true disciplinary 
information; (2) the change in the legal name or form of a business 
organization and the addition of a principal does not necessarily 
trigger a regulatory need for re-registration; and (3) the proposed 
changes do not adequately address the timing of events sufficient to 
require re-registration. FIA similarly opposed the proposed changes on 
the grounds that re-registration should not be required for concurrent 
changes to the name or form of an organization, or the addition of a 
principal because re-registration is not required separately for each 
of these occurrences. FIA also stated that, upon implementation of the 
Dodd-Frank Act, the prospective mergers of affiliated companies will be 
negatively impacted by the proposed requirements.
    After carefully considering the foregoing comments, the Commission 
has determined not to adopt the amendment in Sec.  3.31(a)(3) and (5) 
as proposed.\15\ The Commission intends to promptly consider 
alternatives to the Proposal's re-registration requirements \16\ in 
order to address customer protection issues raised by the current 
rules. In the meantime, a prospective customer will continue to be able 
to obtain disciplinary history of any associated organizations by 
reviewing the list of principals shared by both the currently and 
formerly registered organizations, which is already contained in a 
publicly available database maintained by the NFA.
---------------------------------------------------------------------------

    \15\ In its comment letter, the NFA also suggested a few 
technical edits to the language in proposed Sec.  3.31(a)(2) and (4) 
to reflect the current filing requirements associated with the 
filing of Form 7-R. The Commission agrees with these comments and is 
adopting these technical edits in the final rule. Additionally, as a 
technical change, the Commission is deleting Sec.  3.31(b)(2) 
because it duplicates some of the language in Sec.  3.31(a)(1) with 
respect to the obligations of applicants for registration as SDs or 
MSPs, and is combining the reference to principals of SDs or MSPs 
found in current Sec.  3.31(b)(2) with the reference to principals 
of other registrants in current Sec.  3.31(b)(1).
    \16\ In comparison, consider that broker-dealers regulated by 
the Securities and Exchange Commission are required to provide on 
Form BD, which is filed with the Financial Industry Regulatory 
Authority, any information about business predecessors, including 
the date of succession, name of predecessor, and the registration 
number for any predecessor.
---------------------------------------------------------------------------

    In its comment letter, the NFA also suggested a few technical edits 
to the language in proposed Sec.  3.31 to clarify that: (1) It is not 
the electronic update reporting a change on a Form 7-R that creates any 
deficiency or inaccuracy; and (2) an applicant or registrant no longer 
lists its principals who are individuals on its application for 
registration, as only holding companies are listed. The Commission 
believes that these comments improve upon the proposed language and is 
adopting these suggested changes in the final regulation. Finally, as 
previously mentioned, the Commission is also adopting additional 
technical modifications in Sec.  3.31 to reflect the use of Form 7-R 
for floor traders that are non-natural persons.

E. Corrections

    In the Proposal, the Commission noted that it would be necessary to 
harmonize any distinctions between the Proposal and other rulemakings 
as they become final. On January 19, 2012, the Commission published in 
the Federal Register a final rulemaking regarding the registration of 
SDs and MSPs.\17\ In that final rulemaking, the Commission adopted new 
registration requirements for SDs and MSPs that were not contained in 
the rule language on which the Proposal was based. In order to 
integrate the new rule language from the above final rulemaking with 
the proposed language to be finalized in this release, the Commission 
is incorporating, where relevant, the amended rule language referencing 
SDs and MSPs into this release.\18\
---------------------------------------------------------------------------

    \17\ 77 FR 2613, Jan. 19, 2012. The Commission subsequently 
published a correction regarding certain language set forth in the 
January 19, 2012 release. See 77 FR 3590, Jan. 25, 2012.
    \18\ See, e.g., Sec.  3.12.
---------------------------------------------------------------------------

III. Related Matters

A. Regulatory Flexibility Act

    The Regulatory Flexibility Act (Reg Flex Act) requires that 
agencies consider whether the rules they propose will have a 
significant economic impact on a substantial number of small entities 
and, if so, provide a regulatory flexibility analysis respecting the 
impact.\19\ A regulatory flexibility analysis or certification is 
required for ``any rule for which the agency publishes a general notice 
of proposed rulemaking pursuant to'' the notice-and-comment provisions 
of the Administrative Procedure Act, 5 U.S.C. 553(b) or any other 
law.\20\ The final rules promulgated today amend existing rules in part 
3 regarding the registration of intermediaries consistent with other 
Commission rulemakings issued pursuant to the Dodd-Frank Act, and also 
make other technical, non-substantive amendments to part 3.
---------------------------------------------------------------------------

    \19\ 5 U.S.C. 601 et seq.
    \20\ See 5 U.S.C. 601(2), 603, 604 and 605.
---------------------------------------------------------------------------

    As set forth in the Proposal,\21\ the final rules shall affect 
registered FCMs, IBs, commodity trading advisors, commodity pool 
operators, SDs, and MSPs. The Commission has previously determined that 
FCMs, commodity pool operators, SDs, and MSPs are not small entities 
for purposes of the Reg Flex Act.\22\ The Commission has previously 
made a determination with respect to IBs and commodity trading advisors 
to evaluate within the context of a

[[Page 51901]]

particular rule proposal whether all or some IBs or commodity trading 
advisors should be considered to be small entities and, if so, to 
analyze the economic impact on them of any such rule.\23\ The final 
rules will also affect floor traders. The Commission has not previously 
made a determination regarding floor traders, since currently all 
registered floor traders are individuals, and individuals are not 
included in the small entity analysis under the Reg Flex Act.
---------------------------------------------------------------------------

    \21\ The Commission did not receive any comments regarding the 
Reg Flex Act and the Proposal.
    \22\ See 47 FR 18618, 18619-20, Apr. 30, 1982 (FCMs and 
commodity pool operators); 77 FR 30596, 30701 (finding that MSPs are 
not small entities and that the number of SDs that are small 
entities, if any, is not significant).
    \23\ See, with respect to commodity trading advisors, 47 FR 
18620, Apr. 30, 1982, and see, with respect to IBs, 48 FR 35276, 
Aug. 3, 1983.
---------------------------------------------------------------------------

    Since there could be some small entities that register as IBs, 
commodity trading advisors, or floor traders, the Commission considered 
whether this rulemaking would have a significant economic impact on 
these registrants. The final rules would clarify the mechanics of 
registration by updating cross-references, consolidating exemptions, 
and deleting obsolete forms. The Commission does not expect registrants 
to incur additional expenses as a result of these clarifications. 
Consequently, the Commission finds that there is no significant 
economic impact on IBs or commodity trading advisors resulting from 
this rulemaking. The final rules also provide clarity to floor traders 
regarding existing registration requirements (for example, the 
revisions to Sec.  3.11 clarify that an entity that wishes to register 
as a floor trader shall do so by filing Form 7-R), rather than imposing 
any new registration requirement. Consequently, the Commission finds 
that there is no significant economic impact on floor traders resulting 
from this rulemaking.
    Accordingly, for the reasons stated in the Proposal and the 
additional rationale provided above, the Commission believes that the 
conforming and other technical amendments in this rulemaking will not 
have a significant economic impact on a substantial number of small 
entities. Therefore, the Chairman, on behalf of the Commission, hereby 
certifies, pursuant to 5 U.S.C. 605(b), that the regulations being 
published today by this Federal Register release will not have a 
significant economic impact on a substantial number of small entities.

B. Paperwork Reduction Act

    Under the Paperwork Reduction Act of 1995 (PRA), an agency may not 
conduct or sponsor, and a person is not required to respond to, a 
collection of information unless it displays a currently valid control 
number.\24\ In the Proposal, the Commission indicated that the proposed 
rules would not impose any new recordkeeping or information collection 
requirements, or other collections of information that require approval 
of the Office of Management and Budget under the PRA. The Commission 
invited public comment on the accuracy of its estimate that no 
additional information collection requirements or changes to existing 
collection requirements would result from the rules proposed herein. In 
response, the Commission received no comments.
---------------------------------------------------------------------------

    \24\ 44 U.S.C. 3501 et seq.
---------------------------------------------------------------------------

    The currently approved rule collection covering the regulatory 
filings discussed in this final rule (3038-0023, which covers Forms 3-
R, 7-R, 8-R and 8-T) has a burden of 78,109 respondents and 7,030 
annual hours.\25\ The Commission believes that the number of entities 
filing Form 7-R will increase slightly, since that form may now be used 
by an entity to register as a floor trader, and the number of persons 
filing Form 8-R and 8-T will also increase slightly, when individuals 
who are principals of entities that are registered as floor traders use 
those forms to list themselves.
---------------------------------------------------------------------------

    \25\ See currently approved information collection, available at 
http://www.reginfo.gov/public/do/PRAICList?ref_nbr=201203-3038-004.
---------------------------------------------------------------------------

    Therefore, the Commission has determined to revise the burden for 
this information collection as follows. The burden associated with the 
use of Form 7-R for the registration of entities as floor traders is 
estimated to be 60 hours, assuming 60 respondents,\26\ which will 
result from: (1) Application for registration by entities as floor 
traders and submission of required information on behalf of their 
respective principals; (2) initially, no withdrawals from registration 
by floor traders and a relatively small decrease in the number of their 
respective principals; and (3) initially, no reported corrections. 
Burden means the total time, effort, or financial resources expended by 
persons to generate, maintain, retain, disclose or provide information 
to or for a federal agency.
---------------------------------------------------------------------------

    \26\ The Commission has previously estimated that approximately 
120 entities will register as SDs. See 77 FR 2613, 2622 (January 19, 
2012). The Commission believes it is reasonable to estimate that 
half as many entities will register as floor traders.
---------------------------------------------------------------------------

    The respondent burden for this collection is estimated to average 1 
hour per response for the Form 7-R; 0.8 hours per response for the Form 
8-R; and 0.2 hours per response for the Form 8-T.\27\ These estimates 
include the time needed to review instructions; to prepare technology 
and systems for the purposes of collecting, validating, and verifying 
information, processing and maintaining information, and disclosing and 
providing information; to adjust the existing ways to comply with any 
previously applicable instructions and requirements; to train personnel 
to be able to respond to a collection of information; and to transmit 
or otherwise disclose the information.
---------------------------------------------------------------------------

    \27\ See id. at 2643.
---------------------------------------------------------------------------

Form 7-R
    Respondents/Affected Entities: 60.
    Estimated number of responses: 60.
    Estimated total annual burden on respondents: 1 hour.
    Frequency of collection: On occasion and annually.
    Burden Statement: 60 respondents x 1 hour = 60 Burden Hours.
Form 8-R
    Respondents/Affected Entities: 5 principals per each of 60 floor 
traders.
    Estimated number of responses: 300.
    Estimated total annual burden on respondents: 0.8 hours.
    Frequency of collection: On occasion.
    Burden Statement: 300 respondents x 0.8 hours = 240 Burden Hours.
Form 8-T
    Respondents/Affected Entities: 1 principal per each of 10 floor 
traders.
    Estimated number of responses: 10.
    Estimated total annual burden on respondents: 0.2 hours.
    Frequency of collection: On occasion.
    Burden Statement: 10 respondents x 0.2 hours = 2 Burden Hours.

C. Cost-Benefit Considerations

    Section 15(a) of the CEA \28\ requires the Commission to consider 
the costs and benefits of its actions before promulgating a regulation 
under the CEA or issuing an order. Section 15(a) further specifies that 
the costs and benefits shall be evaluated in light of the following 
five broad areas of market and public concern: (1) Protection of market 
participants and the public; (2) efficiency, competitiveness, and 
financial integrity of futures markets; (3) price discovery; (4) sound 
risk management practices; and (5) other public interest 
considerations. The Commission considers the costs and benefits 
resulting from its discretionary determinations with respect to the 
Section 15(a) factors.
---------------------------------------------------------------------------

    \28\ 7 U.S.C. 19(a).
---------------------------------------------------------------------------

    The regulations being adopted today conform, modernize, and make 
technical amendments to part 3 governing the regulation of 
intermediaries. Their purpose is to

[[Page 51902]]

ensure that the Commission's current rules are consistent with other 
Commission rulemakings issued pursuant to the Dodd-Frank Act. Before 
adopting these regulations, the Commission sought public comment on the 
Proposal, including comment on the costs and benefits of the Proposal. 
While inviting public comments on its cost-benefit considerations, the 
Proposal clarified that the substantive proposed rulemakings with which 
this rulemaking is associated have addressed the costs and benefits of 
the proposals as required by section 15(a) of the CEA.\29\
---------------------------------------------------------------------------

    \29\ 76 FR at 12891.
---------------------------------------------------------------------------

    The Commission received few specific comments concerning the 
Proposal's consideration of costs and benefits beyond general comments 
that the costs associated with particular rule amendments would 
outweigh the benefits. Those it did receive are addressed in the 
discussion below. None of the comments received provided a basis to 
quantify estimated costs or benefits.
    The Commission's baseline for consideration of the costs and 
benefits of this rulemaking are the costs and benefits that the public 
and market participants would experience in the absence of this 
proposed regulatory action. In other words, the proposed baseline is an 
alternative situation in which the Commission takes no action to 
conform, modernize, and make technical adjustments to its existing 
rules as described above in light of the Dodd-Frank Act amendments to 
the CEA.
1. Costs and Benefits of the Conforming Amendments--In General
    As set forth in the Proposal, the regulations the Commission is 
adopting concern conforming and technical amendments to part 3 
governing the registration of intermediaries. Although the conforming 
amendments do not involve substantive changes to existing regulations, 
and hence no significant changes to the costs or benefits of the same, 
the final rules do benefit market participants by adding specificity to 
the mechanics of registration, which also benefits customers in the 
form of increased transparency. For example, the conforming amendments 
will add references to SEFs in Sec.  3.42 to clarify that a temporary 
license would immediately terminate upon failure to comply with an 
award in an arbitration proceeding conducted pursuant to the rules of a 
SEF.
2. Costs and Benefits of the Definitions
    Current Sec.  3.1(a) sets forth the definition of ``principal,'' 
and Sec.  3.1(a)(3) carves out from that definition certain persons 
that have made capital contributions in the form of subordinated debt 
to a registrant, including unaffiliated banks operating in the U.S. and 
U.S. branches of foreign banks. The Commission is adopting amendments 
to expand the carve-out to accommodate the likelihood that persons with 
capital contributions from foreign banks might register as SDs and thus 
be included within the definition of principal. This expanded 
definitional carve-out makes the foreign bank registration process 
consistent with that for domestic banks. This consistency promotes 
market efficiency by avoiding additional costs that foreign banks would 
otherwise incur to comply with listing and qualification requirements.
    No comments were received with respect to any cost or benefit 
implications of this definitional amendment, notwithstanding that the 
Commission specifically sought comments concerning it.\30\
---------------------------------------------------------------------------

    \30\ The Commission requested comments on whether the provision 
is warranted to ensure uniform listing of principals by domestic and 
foreign-domiciled registrants, and whether the expansion would 
ensure that the list of principals remains a meaningful reflection 
of the persons who actually exercise control over the registrant's 
regulated activities.
---------------------------------------------------------------------------

3. Costs and Benefits of Section 3.10--Registration of Futures 
Commission Merchants, Retail Foreign Exchange Dealers, Introducing 
Brokers, Commodity Trading Advisors, Commodity Pool Operators, Swap 
Dealers, Major Swap Participants, and Leverage Transaction Merchants. 
Section 3.11--Registration of Floor Brokers and Floor Traders. Section 
3.12--Registration of Associated Persons of Futures Commission 
Merchants, Retail Foreign Exchange Dealers, Introducing Brokers, 
Commodity Trading Advisors, Commodity Pool Operators and Leverage 
Transaction Merchants
    Section 3.10 generally sets forth the registration requirements for 
various Commission registrants. The Commission has decided to implement 
the expansion of the existing exemption in Sec.  3.10(c)(2) and (3), 
which will introduce parity between registration obligations of foreign 
brokers and foreign intermediaries conducting commodity interest 
transactions bilaterally, on DCMs, and on SEFs. The Commission expects 
such expansion of the exemption to reduce compliance costs without 
affecting customer protection. The Commission has also decided to 
implement the proposed new paragraph Sec.  3.10(c)(5), which will 
provide regulatory certainty that the activities engaged in solely as 
an associated person of an SD would not require such person to register 
as an SD. The Commission believes that this amendment is beneficial by 
reducing the costs to market participants of approaching the Commission 
for clarifications.
    Section 3.11 is being amended to reflect the further definition of 
the term ``swap dealer'' which, among, other things, excludes certain 
swaps entered into by registered floor traders from the SD 
determination. Traditionally, natural persons have registered as floor 
traders. However, following promulgation of rules further defining the 
term ``swap dealer,'' the Commission foresees that firms will register 
as floor traders, making the previous rule requiring fingerprinting for 
all floor traders impractical without clarification. The new rules 
clarify that principals of a firm registering as a floor trader, and 
each individual responsible for entry of orders from that floor 
trader's own account, will be subject to the fingerprinting 
requirement. The Commission believes that this amendment is beneficial 
by obviating the need for potentially impacted market participants to 
incur costs to approach the Commission for clarifications. The other 
amendments extending the scope of Sec.  3.11 to SEFs, while mainly 
technical in nature, will improve operational efficiency by allowing 
NFA to properly process applications for registration for floor traders 
engaged in swap activities.
    Section 3.12 generally sets forth the registration requirement for 
APs. The Commission is adopting an amendment to Sec.  3.12(h)(1)(i) to 
provide that a person is not required to register as an AP in any 
capacity if he or she is registered in one of the other enumerated 
categories, including an SD or MSP. FIA agreed with the Commission that 
it is highly improbable that an individual, rather than an entity, 
would register as an SD and MSP, but supported the Commission's 
proposal in light of the clarity it provides. As the change clarifies 
and extends the exemptions to activities of an SD or MSP, it will not 
create additional costs, and will benefit the markets by promoting 
efficiency by eliminating the need for multiple registrations by a 
single individual.
4. Costs and benefits--DTEF
    The rules amendments adopted today delete the term DTEF from 
Sec. Sec.  3.2(c), 3.2(c)(2), 3.10(a)(3)(i)(A), 3.10(c)(2)(i),

[[Page 51903]]

3.10(c)(3)(i), 3.10(c)(4)(ii) and (iv), 3.11(a)(2) and (3), 3.11(b), 
3.31(d), 3.40(a)(2)(iv), 3.42(a)(6), and 3.46(a)(8). This will 
implement the abolishment of DTEF as a market category by the Dodd-
Frank Act.
    As this change is mandated by statute, it will not create costs and 
benefits relative to the baseline. No comments were received on the 
costs and benefits of this aspect of the Proposal.
5. Cost and Benefits of Modernization and Technical Amendments to Part 
3--Definitions
    Section 3.1(a)(2) defines a principal to include persons who exceed 
a threshold for equity ownership. As a technical matter, the Commission 
is adopting amendments to harmonize the references to outstanding 
classes of securities in Sec.  3.1(a)(2)(i) and (ii) by referring 
throughout to ``outstanding shares of any class of equity securities, 
other than non-voting securities.'' The primary benefit from these 
amended regulations is that they provide specificity for calculations 
involving authorized but unissued securities, or debt securities.
    Also, the Commission is amending its regulations to move the 
concept of indirect owners found in the definition of beneficial 
ownership in Sec.  3.1(d) to Sec.  3.1(a)(4) to serve as a backstop to 
the requirement to list indirect owners in Sec.  3.1(a)(2). The 
Commission received no comments with respect to the costs and benefits 
of this amendment. The Commission does not believe that this amendment 
will have a material impact on costs and benefits relative to the 
baseline.
    The rules incorporate revised language further defining the 
definition of principal to include any person who has the power to 
exercise a controlling influence over an entity's activities that are 
subject to regulation by the Commission. As described earlier, the 
proposed amendments were designed to reduce the scope of persons who 
might potentially be covered by the definition. Under certain 
circumstances, the revised Sec.  3.1(a)(2)(i) language referencing 
those with power to exercise a controlling influence could potentially 
increase the scope of persons covered by the definition. But, given 
that this amendment is similar to an existing requirement in Form BD 
covering broker-dealers, the Commission believes that any additional 
costs will be limited to the subset of firms that are not already 
registered with the SEC and within this subset, those firms which have 
individuals who are not subject to the existing equity ownership 
threshold, or the existing director or officer function threshold, but 
nonetheless who possess the power to exercise control. Given the nature 
of the control structure being addressed, while it is not feasible for 
the Commission to estimate the number of firms likely to be impacted by 
this rule, it believes that costs of complying with the rule are likely 
to be minimal because information on which owners of an entity exercise 
control is generally known to officers of that entity. Furthermore, the 
minimal costs are justified by the benefits to the market and market 
participants from ensuring that individuals cannot circumvent the 
fitness qualifications presently in place for principals by structuring 
their holdings into non-voting securities, and then exercising control 
through a separate agreement.
6. Costs and Benefits of Section 3.31--Deficiencies, Inaccuracies, and 
Changes To Be Reported, and Section 3.33--Withdrawal From Registration
    Current Sec.  3.31 sets forth procedural requirements for a 
registrant to update and/or correct information previously provided to 
the Commission and the NFA. Section 3.33 addresses the procedural 
requirements for the withdrawal of registration. The Commission is 
adopting amendments to Sec.  3.31(a) to reference the requirement in 
amended Sec.  3.33 to withdraw registration upon certain events of 
dissolution, and in Sec.  3.31(b), (c) and (d) to make technical 
corrections.
    The adopted amendments in Sec.  3.31 are technical and are not 
expected to involve costs, but will provide greater clarity by 
correcting references to outdated forms and by deleting duplicate 
instructions. The amendments to Sec.  3.33 clarify the requirement to 
withdraw under certain circumstances involving dissolution of a 
company, and would improve the predictability of withdrawal 
requirements to the benefit of market participants. There were no 
comments on the costs and benefits of the proposed withdrawal 
requirements under Sec.  3.33.
7. Costs and Benefits of Registration Forms
    The Commission is adopting amendments to the regulations addressing 
the forms used during the registration process. These changes are 
technical in nature--for example, the changes would delete references 
to an obsolete form and obsolete cross-references. The Commission does 
not believe that increased costs to market participants or the public 
will result from these changes. That said, the Commission believes they 
do provide a benefit by addressing gaps in the current information 
collected through the various forms, particularly those forms cross-
referencing other data.
    There were no comments on the costs and benefits of the proposed 
technical amendments to the forms.
8. Section 15(a) Factors
     Protection of market participants and the public.
    The Commission believes that the amendments to Sec.  3.33 will 
improve the protection of market participants and the public by 
requiring withdrawal of registration in the event of dissolution of a 
registrant, thus improving the protection of the public.
     Efficiency, competitiveness, and financial integrity.
    The amendments to Sec.  3.1 clarify the calculations used to 
determine who meets the definition of principal, reducing uncertainty 
surrounding compliance by intermediaries. The amendments to the 
regulations addressing the forms used during the registration process 
will update the description of information collection and make it more 
accurate, which improves the overall efficiency of our markets.
     Price discovery. The Commission has not identified any 
impact to the price discovery process from these rules.
     Sound risk management policies. The Commission has not 
identified any impact to sound risk management practices from these 
rules.
     Other public interest considerations. The Commission has 
not identified any impact to other public interest considerations from 
these rules.

List of Subjects in 17 CFR Part 3

    Administrative practice and procedure, Brokers, Commodity futures, 
Major swap participants, Reporting and recordkeeping requirements, Swap 
dealers.

    For the reasons stated in the preamble, the Commission amends 17 
CFR part 3 as follows:

PART 3--REGISTRATION

0
1. The authority citation for part 3 is revised to read as follows:

    Authority: 5 U.S.C. 552, 552b; 7 U.S.C. 1a, 2, 6a, 6b, 6b-1, 6c, 
6d, 6e, 6f, 6g, 6h, 6i, 6k, 6m, 6n, 6o, 6p, 6s, 8, 9, 9a, 12, 12a, 
13b, 13c, 16a, 18, 19, 21, 23.


0
2. Amend Sec.  3.1 by revising paragraphs (a) introductory text, 
(a)(2), and (a)(3), adding paragraph (a)(4), and removing and reserving 
paragraphs (d) and (e). The revisions and addition read as follows:

[[Page 51904]]

Sec.  3.1  Definitions.

    (a) Principal. Principal means, with respect to an entity that is 
an applicant for registration, a registrant or a person required to be 
registered under the Act or the regulations in this part:
* * * * *
    (2)(i) Any individual who directly or indirectly, through 
agreement, holding company, nominee, trust or otherwise, is either the 
owner of ten percent or more of the outstanding shares of any class of 
equity securities, other than non-voting securities, is entitled to 
vote or has the power to sell or direct the sale of ten percent or more 
of the outstanding shares of any class of equity securities, other than 
non-voting securities, is entitled to receive ten percent or more of 
the profits of the entity, or has the power to exercise a controlling 
influence over the entity's activities that are subject to regulation 
by the Commission; or
    (ii) Any person other than an individual that is the direct owner 
of ten percent or more of the outstanding shares of any class of equity 
securities, other than non-voting securities; or
    (3) Any person that has contributed ten percent or more of the 
capital of the entity, provided, however, that if such capital 
contribution consists of subordinated debt contributed by either:
    (i) An unaffiliated bank insured by the Federal Deposit Insurance 
Corporation,
    (ii) An unaffiliated ``foreign bank,'' as defined in 12 CFR 
211.21(n) that currently operates an ``office of a foreign bank,'' as 
defined in 12 CFR 211.21(t), which is licensed under 12 CFR 211.24(a),
    (iii) Such unaffiliated office of a foreign bank that is licensed, 
or
    (iv) An insurance company subject to regulation by any State, such 
bank, foreign bank, office of a foreign bank, or insurance company will 
not be deemed to be a principal for purposes of this section, provided 
such debt is not guaranteed by another party not listed as a principal.
    (4) Any individual who, directly or indirectly, creates or uses a 
trust, proxy, power of attorney, pooling arrangement or any other 
contract, arrangement, or device with the purpose or effect of 
divesting such person of direct or indirect ownership of an equity 
security of the entity, other than a non-voting security, or preventing 
the vesting of such ownership, or of avoiding making a contribution of 
ten percent or more of the capital of the entity, as part of a plan or 
scheme to evade being deemed a principal of the entity, shall be deemed 
to be a principal of the entity.
* * * * *

0
3. Amend Sec.  3.2 by revising the section heading and paragraphs (c) 
introductory text and (c)(2) to read as follows:


Sec.  3.2  Registration processing by the National Futures Association; 
notification and duration of registration.

* * * * *
    (c) The National Futures Association shall notify the registrant, 
or the sponsor in the case of an applicant for registration as an 
associated person, and each designated contract market and swap 
execution facility that has granted the applicant trading privileges in 
the case of an applicant for registration as a floor broker or floor 
trader, if registration has been granted under the Act.
* * * * *
    (2) If an applicant for registration as a floor broker or floor 
trader receives a temporary license in accordance with Sec.  3.40, the 
National Futures Association shall notify the designated contract 
market or swap execution facility that has granted the applicant 
trading privileges that only a temporary license has been granted.
* * * * *

0
4. Amend Sec.  3.4 by revising paragraph (a) to read as follows:


Sec.  3.4  Registration in one capacity not included in registration in 
any other capacity.

    (a) Except as may be otherwise provided in the Act or in any rule, 
regulation, or order of the Commission, each futures commission 
merchant, retail foreign exchange dealer, swap dealer, major swap 
participant, floor broker, floor trader of any commodity for future 
delivery, commodity trading advisor, commodity pool operator, 
introducing broker, leverage transaction merchant, and associated 
person (other than an associated person of a swap dealer or major swap 
participant) must register as such under the Act. Except as may be 
otherwise provided in the Act or in any rule, regulation, or order of 
the Commission, registration in one capacity under the Act shall not 
include registration in any other capacity.
* * * * *

0
5. Amend Sec.  3.10 by revising paragraphs (a)(3)(i)(A), (c)(2)(i), 
(c)(3)(i), (c)(4)(ii), (c)(4)(iii), and (c)(4)(iv) and adding paragraph 
(c)(5) to read as follows:


Sec.  3.10  Registration of futures commission merchants, introducing 
brokers, commodity trading advisors, commodity pool operators, swap 
dealers, major swap participants, and leverage transaction merchants.

    (a) * * *
    (3) * * *
    (i) * * *
    (A) The broker or dealer limits its solicitation of orders, 
acceptance of orders, or execution of orders, or placing of orders on 
behalf of others involving any contracts of sale of any commodity for 
future delivery, on or subject to the rules of any contract market, to 
security futures products as defined in section 1a(44) of the Act;
* * * * *
    (c) * * *
    (2)(i) A foreign broker, as defined in Sec.  1.3(xx) of this 
chapter, is not required to register as a futures commission merchant 
if it submits any commodity interest transactions executed bilaterally, 
on or subject to the rules of a designated contract market, or on or 
subject to the rules of a swap execution facility, for clearing on an 
omnibus basis through a futures commission merchant registered in 
accordance with section 4d of the Act.
* * * * *
    (3)(i) A person located outside the United States, its territories 
or possessions engaged in the activity of: An introducing broker, as 
defined in Sec.  1.3(mm) of this chapter; a commodity trading advisor, 
as defined in Sec.  1.3(bb) of this chapter; or a commodity pool 
operator, as defined in Sec.  1.3(nn) of this chapter, in connection 
with any commodity interest transaction executed bilaterally or made on 
or subject to the rules of any designated contract market or swap 
execution facility only on behalf of persons located outside the United 
States, its territories or possessions, is not required to register in 
such capacity provided that any such commodity interest transaction is 
submitted for clearing through a futures commission merchant registered 
in accordance with section 4d of the Act.
* * * * *
    (4) * * *
    (ii) Such a person introduces, on a fully-disclosed basis in 
accordance with Sec.  1.57 of this chapter, any institutional customer, 
as defined in Sec.  1.3(g) of this chapter, to a registered futures 
commission merchant for the purpose of trading on a designated contract 
market;
    (iii) Such person's affiliated futures commission merchant has 
filed with the National Futures Association (Attn: Vice President, 
Compliance) an acknowledgement that the affiliated futures commission 
merchant will be jointly and severally liable for any violations of the 
Act or the Commission's regulations committed by such person in 
connection with those introducing activities, whether or not

[[Page 51905]]

the affiliated futures commission merchant submits for clearing any 
trades resulting from those introducing activities; and
    (iv) Such person does not solicit any person located in the United 
States, its territories or possessions for trading on a designated 
contract market, nor does such person handle the customer funds of any 
person located in the United States, its territories or possessions for 
the purpose of trading on any designated contract market.
* * * * *
    (5) In determining whether a person is a swap dealer, the 
activities of a registered swap dealer with respect to which such 
person is an associated person shall not be considered.
* * * * *

0
6. Revise Sec.  3.11 to read as follows:


Sec.  3.11  Registration of floor brokers and floor traders.

    (a) Application for registration. (1) Application for registration 
as a floor broker or floor trader must be on Form 8-R, if as an 
individual, or Form 7-R, if as a non-natural person, and must be 
completed and filed with the National Futures Association in accordance 
with the instructions thereto. Each Form 7-R filed in accordance with 
this paragraph (a) must be accompanied by a Form 8-R, completed in 
accordance with the instructions thereto and executed by each 
individual who is a principal of the applicant, and each individual 
responsible for entry of orders from that applicant's own account. Each 
Form 8-R filed in accordance with this paragraph (a) must be 
accompanied by the fingerprints of the applicant on a fingerprint card 
provided for that purpose by the National Futures Association, except 
that a fingerprint card need not be filed by any applicant who has a 
current Form 8-R on file with the Commission or the National Futures 
Association.
    (2) An applicant for registration as a floor broker or floor trader 
will not be registered or issued a temporary license as a floor broker 
or floor trader unless the applicant has been granted trading 
privileges by a board of trade designated as a contract market or 
registered as a swap execution facility by the Commission.
    (3) When the Commission or the National Futures Association 
determines that an applicant for registration as a floor broker or 
floor trader is not disqualified from such registration or temporary 
license, the National Futures Association will notify the applicant and 
any contract market or swap execution facility that has granted the 
applicant trading privileges that the applicant's registration or 
temporary license as a floor broker or floor trader is granted.
    (b) Duration of registration. A person registered as a floor broker 
or floor trader in accordance with paragraph (a) of this section, and 
whose registration has neither been revoked nor withdrawn, will 
continue to be so registered unless such person's trading privileges on 
all contract markets and swap execution facilities have ceased: 
provided, that if a floor broker or floor trader whose trading 
privileges on all contract markets and swap execution facilities have 
ceased for reasons unrelated to any Commission action or any contract 
market or swap execution facility disciplinary proceeding and whose 
registration is not revoked, suspended or withdrawn is granted trading 
privileges as a floor broker or floor trader, respectively, by any 
contract market or swap execution facility where such person held such 
privileges within the preceding sixty days, such registration as a 
floor broker or floor trader, respectively, shall be deemed to continue 
and no new Form 7-R, Form 8-R or Form 3-R record of a change to Form 7-
R or Form 8-R need be filed solely on the basis of the resumption of 
trading privileges. A floor broker or floor trader is prohibited from 
engaging in activities requiring registration under the Act or from 
representing such person to be a registrant under the Act or the 
representative or agent of any registrant during the pendency of any 
suspension of such registration or of all such trading privileges. Each 
contract market and swap execution facility that has granted trading 
privileges to a person who is registered, or has applied for 
registration, as a floor broker or floor trader, must provide notice in 
accordance with Sec.  3.31(d) after such person's trading privileges on 
such contract market or swap execution facility have ceased.
    (c) Exceptions. A registered floor broker need not also register as 
a floor trader in order to engage in activity as a floor trader.

0
7. Amend Sec.  3.12 by revising paragraphs (b), (c) introductory text, 
(g), (h)(1) introductory text, and (h)(1)(i) and (ii) to read as 
follows:


Sec.  3.12  Registration of associated persons of futures commission 
merchants, retail foreign exchange dealers, introducing brokers, 
commodity trading advisors, commodity pool operators and leverage 
transaction merchants.

* * * * *
    (b) Duration of registration. A person registered in accordance 
with paragraphs (c), (d), (f), or (i) of this section and whose 
registration has not been revoked will continue to be so registered 
until the revocation or withdrawal of the registration of each of the 
registrant's sponsors, or until the cessation of the association of the 
registrant with each of the registrant's sponsors. Such person will be 
prohibited from engaging in activities requiring registration under the 
Act or from representing himself or herself to be a registrant under 
the Act or the representative or agent of any registrant during the 
pendency of any suspension of his or her registration, or his or her 
sponsor's registration. Each of the registrant's sponsors must file a 
notice in accordance with Sec.  3.31(c) reporting the termination of 
the association of the associated person.
    (c) Application for registration. Except as otherwise provided in 
paragraphs (d), (f), and (i) of this section, application for 
registration as an associated person in any capacity must be on Form 8-
R, completed and filed in accordance with the instructions thereto.
* * * * *
    (g) Petitions for exemption. Any person adversely affected by the 
operation of this section may file a petition with the Secretary of the 
Commission, which petition must set forth with particularity the 
reasons why that person believes that an applicant should be exempted 
from the requirements of this section and why such an exemption would 
not be contrary to the public interest and the purposes of the 
provision from which exemption is sought. The petition will be granted 
or denied by the Commission on the basis of the papers filed. The 
Commission may grant such a petition if it finds that the exemption is 
not contrary to the public interest and the purposes of the provision 
from which exemption is sought. The petition may be granted subject to 
such terms and conditions as the Commission may find appropriate.
    (h) Exemption from registration. (1) A person is not required to 
register as an associated person in any capacity if that person is:
    (i) Registered under the Act as a futures commission merchant, 
retail foreign exchange dealer, swap dealer, major swap participant, 
floor broker, or as an introducing broker;
    (ii) Engaged in the solicitation of funds, securities, or property 
for a participation in a commodity pool, or the supervision of any 
person or persons so engaged, pursuant to registration

[[Page 51906]]

with the Financial Industry Regulatory Authority as a registered 
representative, registered principal, limited representative or limited 
principal, and that person does not engage in any other activity 
subject to regulation by the Commission;
* * * * *

0
8. Amend Sec.  3.21 by:
0
a. Revising paragraphs (a)(1) and (2);
0
b. Adding paragraph (a)(3); and
0
c. Revising paragraphs (b)(1) through (3), (c) introductory text, and 
(c)(4)(i) and (iii).
    The revisions and addition read as follows:


Sec.  3.21  Exemption from fingerprinting requirement in certain cases.

    (a) * * *
    (1) A legible, accurate and complete photocopy of a fingerprint 
card that has been submitted to the Federal Bureau of Investigation for 
identification and appropriate processing and of each report, record, 
and notation made available by the Federal Bureau of Investigation with 
respect to that fingerprint card if such identification and processing 
has been completed satisfactorily by the Federal Bureau of 
Investigation not more than ninety days prior to the filing with the 
National Futures Association of the photocopy;
    (2) A statement that such person's application for initial 
registration in any capacity was granted within the preceding ninety 
days, provided that the provisions of this paragraph (a)(2) shall not 
be applicable to any person who, by Commission rule, regulation, or 
order, was not required to file a fingerprint card in connection with 
such application for initial registration; or
    (3) A statement that such person has a current Form 8-R on file 
with the Commission or the National Futures Association.
    (b) * * *
    (1) With respect to the fingerprints of an associated person: An 
officer, if the sponsor is a corporation; a general partner, if a 
partnership; or the sole proprietor, if a sole proprietorship;
    (2) With respect to fingerprints of a floor broker or individual 
floor trader: The applicant for registration; and with respect to 
fingerprints of each individual who is responsible for entry of orders 
from the account of a floor trader that is a non-natural person, the 
applicant for registration, or
    (3) With respect to the fingerprints of a principal: An officer, if 
the futures commission merchant, retail foreign exchange dealer, swap 
dealer, major swap participant, commodity trading advisor, commodity 
pool operator, introducing broker, floor trader that is a non-natural 
person, or leverage transaction merchant with which the principal will 
be affiliated is a corporation; a general partner, if a partnership; or 
the sole proprietor, if a sole proprietorship.
    (c) Outside directors. Any futures commission merchant, retail 
foreign exchange dealer, swap dealer, major swap participant, 
introducing broker, commodity pool operator, commodity trading advisor, 
floor trader that is a non-natural person, or leverage transaction 
merchant that has a principal who is a director but is not also an 
officer or employee of the firm may, in lieu of submitting a 
fingerprint card in accordance with the provisions of Sec.  3.10(a)(2), 
file a ``Notice Pursuant to Rule 3.21(c)'' with the National Futures 
Association. Such notice shall state, if true, that such outside 
director:
* * * * *
    (4) * * *
    (i) The name of the futures commission merchant, retail foreign 
exchange dealer, swap dealer, major swap participant, introducing 
broker, commodity trading advisor, commodity pool operator, floor 
trader that is a non-natural person, leverage transaction merchant, or 
applicant for registration in any of these capacities of which the 
person is an outside director;
* * * * *
    (iii) The internal controls used to ensure that the outside 
director for whom exemption under this paragraph (c) is sought does not 
have access to the keeping, handling or processing of the items 
described in paragraphs (c)(2)(i) and (ii) of this section; and
* * * * *

0
9. Amend Sec.  3.22 by revising paragraph (b) to read as follows:


Sec.  3.22  Supplemental filings.

* * * * *
    (b) That the person, or any individual who, based upon his or her 
relationship with that person is required to file a Form 8-R in 
accordance with the requirements of this part, as applicable, must, 
within such period of time as the Commission or the National Futures 
Association may specify, complete and file with the Commission or the 
National Futures Association a current Form 7-R, or if appropriate, a 
Form 8-R, in accordance with the instructions thereto.
* * * * *

0
10. Revise Sec.  3.30 to read as follows:


Sec.  3.30  Current address for purpose of delivery of communications 
from the Commission or the National Futures Association.

    (a) The address of each registrant, applicant for registration, and 
principal, as submitted on the application for registration (Form 7-R 
or Form 8-R) or as submitted on the biographical supplement (Form 8-R) 
shall be deemed to be the address for delivery to the registrant, 
applicant or principal for any communications from the Commission or 
the National Futures Association, including any summons, complaint, 
reparation claim, order, subpoena, special call, request for 
information, notice, and other written documents or correspondence, 
unless the registrant, applicant or principal specifies another address 
for this purpose: Provided that the Commission or the National Futures 
Association may address any correspondence relating to a biographical 
supplement submitted for or on behalf of a principal to the futures 
commission merchant, retail foreign exchange dealer, swap dealer, major 
swap participant, introducing broker, commodity pool operator, 
commodity trading advisor, floor trader that is a non-natural person, 
or leverage transaction merchant with which the principal is affiliated 
and may address any correspondence relating to an associated person to 
the futures commission merchant, retail foreign exchange dealer, swap 
dealer, major swap participant, introducing broker, commodity pool 
operator, commodity trading advisor, floor trader that is a non-natural 
person, or leverage transaction merchant with which the associated 
person or the applicant for registration is or will be associated as an 
associated person.
    (b) Each registrant, while registered and for two years after 
termination of registration, and each principal, while affiliated and 
for two years after termination of affiliation, must notify in writing 
the National Futures Association of any change of the address on the 
application for registration, biographical supplement, or other address 
filed with the National Futures Association for the purpose of 
receiving communications from the Commission or the National Futures 
Association. Failure to file a required response to any communication 
sent to the latest such address filed with the National Futures 
Association that is caused by a failure to notify in writing the 
National Futures Association of an address change may result in an 
order of default and award of claimed monetary damages or other 
appropriate order in any National Futures Association or Commission

[[Page 51907]]

proceeding, including a reparation proceeding brought under part 12 of 
this chapter.

0
11. Amend Sec.  3.31 by revising paragraphs (a), (b), (c)(1) 
introductory text, (c)(2), and (d) to read as follows:


Sec.  3.31  Deficiencies, inaccuracies, and changes to be reported.

    (a)(1) Each applicant or registrant as a futures commission 
merchant, retail foreign exchange dealer, swap dealer, major swap 
participant, commodity trading advisor, commodity pool operator, 
introducing broker, floor trader that is a non-natural person or 
leverage transaction merchant shall, in accordance with the 
instructions thereto, promptly correct any deficiency or inaccuracy in 
Form 7-R or Form 8-R that no longer renders accurate and current the 
information contained therein, with the exception of any change that 
requires withdrawal from registration under Sec.  3.33. Each such 
correction shall be prepared and filed in accordance with the 
instructions thereto to create a Form 3-R record of such change.
    (2) Where a registrant has changed its form of organization to or 
from a sole proprietorship, the registrant must request withdrawal from 
registration in accordance with Sec.  3.33.
    (3) Where any person becomes a principal of an applicant or 
registrant subsequent to the filing of the applicant's or registrant's 
current Form 7-R:
    (i) If the new principal is not a natural person, the registrant 
shall update such Form 7-R to create a Form 3-R record of change.
    (ii) If the new principal is a natural person, the registrant shall 
file a Form 8-R, completed in accordance with the instructions thereto 
and executed by such person who is a principal of the registrant and 
who was not listed on the registrant's initial application for 
registration or any amendment thereto.
    (b) Each applicant or registrant as a floor broker, floor trader or 
associated person, and each principal of a futures commission merchant, 
retail foreign exchange dealer, swap dealer, major swap participant, 
commodity trading advisor, commodity pool operator, introducing broker, 
floor trader that is a non-natural person, or leverage transaction 
merchant must, in accordance with the instructions thereto, promptly 
correct any deficiency or inaccuracy in the Form 8-R or supplemental 
statement thereto to create a Form 3-R record of change.
    (c)(1) After the filing of a Form 8-R or updating a Form 8-R to 
create a Form 3-R record of change by or on behalf of any person for 
the purpose of permitting that person to be an associated person of a 
futures commission merchant, retail foreign exchange dealer, commodity 
trading advisor, commodity pool operator, introducing broker, or a 
leverage transaction merchant, that futures commission merchant, retail 
foreign exchange dealer, commodity trading advisor, commodity pool 
operator, introducing broker or leverage transaction merchant must, 
within thirty days after the occurrence of either of the following, 
file a notice thereof with the National Futures Association indicating:
* * * * *
    (2) Each person registered as, or applying for registration as, a 
futures commission merchant, retail foreign exchange dealer, swap 
dealer, major swap participant, commodity trading advisor, commodity 
pool operator, introducing broker, floor trader that is a non-natural 
person, or leverage transaction merchant must, within thirty days after 
the termination of the affiliation of a principal with the registrant 
or applicant, file a notice thereof with the National Futures 
Association.
* * * * *
    (d) Each contract market or swap execution facility that has 
granted trading privileges to a person who is registered, has received 
a temporary license, or has applied for registration as a floor broker 
or floor trader, must notify the National Futures Association within 
sixty days after such person has ceased having trading privileges on 
such contract market or swap execution facility.
* * * * *

0
12. Amend Sec.  3.33 by revising paragraphs (a) introductory text, (b) 
introductory text, and (e) to read as follows:


Sec.  3.33  Withdrawal from registration.

    (a) A futures commission merchant, retail foreign exchange dealer, 
swap dealer, major swap participant, introducing broker, commodity 
trading advisor, commodity pool operator, floor trader that is a non-
natural person, or leverage transaction merchant must request that its 
registration be withdrawn prior to any voluntary resolution to file 
articles (or a certificate) of dissolution (or cancellation), and upon 
notice of any involuntary dissolution initiated by a third-party. A 
futures commission merchant, retail foreign exchange dealer, swap 
dealer, major swap participant, introducing broker, commodity trading 
advisor, commodity pool operator, leverage transaction merchant, floor 
broker or floor trader may request that its registration be withdrawn 
in accordance with the requirements of this section if:
* * * * *
    (b) A request for withdrawal from registration as a futures 
commission merchant, retail foreign exchange dealer, swap dealer, major 
swap participant, introducing broker, commodity trading advisor, 
commodity pool operator, floor trader that is a non-natural person, or 
leverage transaction merchant must be made on Form 7-W, and a request 
for withdrawal from registration as a floor broker or individual floor 
trader must be made on Form 8-W, completed and filed with the National 
Futures Association in accordance with the instructions thereto. The 
request for withdrawal must be made by a person duly authorized by the 
registrant and must specify:
* * * * *
    (e) A request for withdrawal from registration as a futures 
commission merchant, retail foreign exchange dealer, swap dealer, major 
swap participant, introducing broker, commodity pool operator, 
commodity trading advisor, floor trader that is a non-natural person, 
or leverage transaction merchant on Form 7-W, and a request for 
withdrawal from registration as a floor broker or individual floor 
trader on Form 8-W, must be filed with the National Futures Association 
and a copy of such request must be sent by the National Futures 
Association within three business days of the receipt of such 
withdrawal request to the Commodity Futures Trading Commission, 
Division of Swap Dealer and Intermediary Oversight, Three Lafayette 
Centre, 1155 21st Street NW., Washington, DC 20581. In addition, any 
floor broker or individual floor trader requesting withdrawal from 
registration must file a copy of his or her Form 8-W with each contract 
market or swap execution facility that has granted him or her trading 
privileges, and any floor trader that is a non-natural person 
requesting withdrawal from registration must file a copy of its Form 7-
W with each contract market or swap execution facility that has granted 
it trading privileges. Within three business days of any determination 
by the National Futures Association under Sec.  3.10(d) to treat the 
failure by a registrant to file an annual Form 7-R as a request for 
withdrawal, the National Futures Association shall send the Commission 
notice of that determination.
* * * * *

[[Page 51908]]


0
13. Amend Sec.  3.40 by revising paragraph (a)(2) introductory text and 
(a)(2)(iv) to read as follows:


Sec.  3.40  Temporary licensing of applicants for associated person, 
floor broker or floor trader registration.

    (a) * * *
    (2) The National Futures Association may grant a temporary license 
to any applicant for registration as a floor broker or individual floor 
trader upon the contemporaneous filing with the National Futures 
Association of:
* * * * *
    (iv) Evidence that the applicant has been granted trading 
privileges by a contract market or swap execution facility that has 
filed with the National Futures Association a certification signed by 
its chief operating officer with respect to the review of an 
applicant's employment, credit and other history in connection with the 
granting of trading privileges.
* * * * *

0
14. Amend Sec.  3.42 by revising paragraphs (a) introductory text, 
(a)(2), (a)(6), and (a)(8) to read as follows:


Sec.  3.42  Termination.

    (a) A temporary license issued pursuant to Sec.  3.40 shall 
terminate:
* * * * *
    (2) Immediately upon termination of the association of the 
applicant for registration as an associated person with the registrant 
which filed the sponsorship certification, or immediately upon loss of 
trading privileges by an applicant for registration as a floor broker 
or floor trader on all contract markets and swap execution facilities 
which filed the certification described in Sec.  3.40;
* * * * *
    (6) Immediately upon failure to comply with an award in an 
arbitration proceeding conducted pursuant to the rules of a designated 
contract market, swap execution facility or registered futures 
association within the time specified in section 10(g) of the National 
Futures Association's Code of Arbitration or the comparable time period 
specified in the rules of a contract market or other appropriate 
arbitration forum.
* * * * *
    (8) Immediately upon notice to the applicant and the applicant's 
sponsor or the contract market or swap execution facility that has 
granted the applicant trading privileges that:
    (i) The applicant failed to disclose relevant disciplinary history 
information on the applicant's Form 8-R; or
    (ii) An event has occurred leading to a required disclosure on the 
applicant's Form 8-R.
* * * * *

0
15. Amend Sec.  3.44 by revising paragraph (a)(5) to read as follows:


Sec.  3.44  Temporary licensing of applicants for guaranteed 
introducing broker registration.

    (a) * * *
    (5) The fingerprints of the applicant, if a sole proprietor, and of 
each principal (including each branch office manager) thereof on 
fingerprint cards provided by the National Futures Association for that 
purpose.
* * * * *

0
16. Amend Sec.  3.46 by revising paragraphs (a) introductory text, 
(a)(6), (a)(8), and (a)(10) to read as follows:


Sec.  3.46  Termination.

    (a) A temporary license issued pursuant to Sec.  3.44 shall 
terminate:
* * * * *
    (6) Immediately upon failure to comply with an order to pay a civil 
monetary penalty, restitution, or disgorgement within the time 
permitted under section 6(e), 6b, or 6c(d) of the Act;
* * * * *
    (8) Immediately upon failure to comply with an award in an 
arbitration proceeding conducted pursuant to the rules of a designated 
contract market, swap execution facility, or registered futures 
association within the time specified in section 10(g) of the National 
Futures Association's Code of Arbitration or the comparable time period 
specified in the rules of a contract market, swap execution facility, 
or other appropriate arbitration forum.
* * * * *
    (10) Immediately upon notice to the applicant and the guarantor 
futures commission merchant that:
    (i) The applicant or any principal (including any branch officer 
manager) failed to disclose relevant disciplinary history information 
on the applicant's Form 7-R or on a principal's Form 8-R; or
    (ii) An event has occurred leading to a required disclosure on the 
applicant's Form 7-R or on a principal's Form 8-R.
* * * * *

0
17. Amend Sec.  3.56 by revising paragraph (b)(1)(iv) to read as 
follows:


Sec.  3.56  Suspension or modification of registration pursuant to 
section 8a(11) of the Act.

* * * * *
    (b) * * *
    (1) * * *
    (iv) The statement accompanying the notice referred to in paragraph 
(a)(2) of this section and, in an effort to have his registration 
modified rather than suspended, the Supplemental Sponsor Certification 
Statement signed by a sponsor, supervising floor broker or, in the case 
of a floor trader, a supervising registrant, principal, contract 
market, or swap execution facility, as appropriate for the registrant 
in accordance with Sec.  3.60(b)(2)(i) and who meets the standards set 
forth in Sec.  3.60(b)(2)(i)(A) and (C).
* * * * *

0
18. Amend Sec.  3.60 by revising paragraphs (b)(2)(i) introductory 
text, (f)(3), and (l) to read as follows:


Sec.  3.60  Procedure to deny, condition, suspend, revoke or place 
restrictions upon registration pursuant to sections 8a(2), 8a(3) and 
8a(4) of the Act.

* * * * *
    (b) * * *
    (2)(i) In the response, if the person is not an associated person, 
a floor broker or a floor trader or an applicant for registration in 
any of those capacities, the applicant or registrant shall also state 
whether he or she intends to show that registration would not pose a 
substantial risk to the public despite the existence of the 
disqualification set forth in the notice. If the person is an 
associated person, a floor broker or a floor trader or an applicant for 
registration in any of those capacities, the applicant or registrant 
shall also state whether he or she intends to show that full, 
conditioned or restricted registration would not pose a substantial 
risk to the public despite the existence of the disqualification set 
forth in the notice. If the person is an associated person or an 
applicant for registration as an associated person and intends to make 
such a showing, he or she must also submit a letter signed by an 
officer or general partner authorized to bind the sponsor whereby the 
sponsor agrees to sign a Supplemental Sponsor Certification Statement 
and supervise compliance with any conditions or restrictions that may 
be imposed on the applicant or registrant as a result of a statutory 
disqualification proceeding under this section; if the person is a 
floor broker or a floor trader or an applicant for registration in 
either capacity and intends to make such a showing, he or she must, in 
the case of a floor broker or applicant for registration as a floor 
broker, also submit a letter signed by his employer or if he or she has 
no employer by another floor broker or, in the case of a floor trader 
or applicant for registration

[[Page 51909]]

as a floor trader, also submit a letter signed by an officer of the 
floor trader's clearing member, if such officer is a registrant or a 
principal of a registrant, or the chief operating officer of each 
contract market or swap execution facility that has granted trading 
privileges, whereby the employer or floor broker, appropriate 
registrant, principal or chief operating officer (on behalf of the 
contract market or swap execution facility) agrees to sign a 
Supplemental Sponsor Certification Statement and supervise compliance 
with any conditions or restrictions that may be imposed on the 
applicant or registrant as a result of a statutory disqualification 
proceeding under this section; provided, that, with respect to such 
sponsor, supervising employer or floor broker, supervising registrant 
or principal:
* * * * *
    (f) * * *
    (3) If the person is an associated person, a floor broker or a 
floor trader or an applicant for registration in any of those 
capacities, evidence that the applicant's or registrant's registration 
on a conditioned or restricted basis would be subject to supervisory 
controls likely both to detect future wrongdoing by the applicant or 
registrant and protect the public from any harm arising from future 
wrongdoing by the applicant or registrant. Any decision providing for a 
conditioned or restricted registration shall take into consideration 
the applicant's or registrant's statutory disqualification and the time 
period remaining on such statutory disqualification, and shall fix a 
time period after which the registrant and his or her sponsor, 
supervising employer or floor broker, or supervising registrant, 
principal, contract market, or swap execution facility may petition to 
lift or modify the conditions or restrictions in accordance with Sec.  
3.64.
* * * * *
    (l) The failure of any sponsor, supervising employer or floor 
broker, or supervising registrant, principal, contract market, or swap 
execution facility to fulfill its obligations with respect to 
supervision or monitoring of a conditioned or restricted registrant as 
agreed to in the Supplemental Sponsor Certification Statement shall be 
deemed a violation of this rule under the Act.

0
19. Amend Sec.  3.64 by revising paragraph (a)(2) to read as follows:


Sec.  3.64  Procedure to lift or modify conditions or restrictions.

    (a) * * *
    (2) In the petition, the registrant and his or her sponsor, 
supervising employer or floor broker, or supervising registrant, 
principal, contract market, or swap execution facility shall be limited 
to a showing, by affidavit, that the conditions or restrictions have 
been satisfied pursuant to the order which imposed them. The affidavit 
must be sworn to by a person with actual knowledge of the registrant's 
activities on behalf of the sponsor, supervising employer or floor 
broker, or supervising registrant, principal, contract market or swap 
execution facility.
* * * * *

0
20. Amend Sec.  3.75 by revising paragraph (a) to read as follows:


Sec.  3.75  Delegation and reservation of authority.

    (a) The Commission hereby delegates, until such time as it orders 
otherwise, to the Director of the Division of Swap Dealer and 
Intermediary Oversight or his or her designee the authority to grant or 
deny requests filed pursuant to Sec.  3.12(g). The Director of the 
Division of Swap Dealer and Intermediary Oversight may submit to the 
Commission for its consideration any matter which has been delegated to 
him pursuant to Sec.  3.12(g). The Commission hereby delegates, until 
such time as it orders otherwise, the authority to perform all 
functions specified in subparts B through D of this part to the persons 
authorized to perform them thereunder.
* * * * *

    Issued in Washington, DC, on August 15, 2012, by the Commission.
Sauntia S. Warfield,
Assistant Secretary of the Commission.

Appendices to Registration of Intermediaries--Commission Voting Summary 
and Statements of Commissioners

    Note:  The following appendices will not appear in the Code of 
Federal Regulations.

Appendix 1--Commission Voting Summary

    On this matter, Chairman Gensler and Commissioners Sommers, 
Chilton and Wetjen voted in the affirmative; Commissioner O'Malia 
voted in the negative.

Appendix 2--Statement of Chairman Gary Gensler

    I support the final rule to amend certain provisions of Part 3 
of the Commission's regulations regarding the registration of 
intermediaries. The final amendments are necessary to conform 
existing regulations to the new requirements in the Dodd-Frank Wall 
Street Reform and Consumer Protection Act.
    The final rule would amend Part 3 to facilitate the extension of 
the existing registration process to apply to new categories of 
registrants, such as swap dealers and major swap participants. 
Customers will benefit from the increased transparency of the 
registration process. The final amendments also modernize existing 
provisions that will apply to all Commission registrants.
    In addition, the Commission has made technical changes to permit 
legal entities (in addition to natural persons) to register as floor 
traders. This change was required to implement the exception from 
the definition of a swap dealer for floor traders that trade cleared 
swaps on swap execution facilities.

Appendix 3--Statement of Commissioner Scott O'Malia

    I respectfully dissent with the Commodity Futures Trading 
Commission's (``Commission'') final rule to adopt certain conforming 
amendments to part 3 of the Commission's regulations regarding the 
registration of intermediaries.\1\ I find it disturbing that coming 
off of two widely publicized incidents of intermediary fraud and 
misappropriation of customer funds (i.e., MF Global Holdings and 
Peregrine Financial Group), the Commission is not adopting a rule 
that will provide customers with greater transparency of the 
professional and disciplinary background of Commission registrants. 
While I support most of what is included in this rule, I am unable 
to vote in the affirmative because of what has been excluded. The 
Commission indicates in the final rule that it will work with the 
National Futures Association (``NFA'') to increase transparency, but 
does not set forth any details describing how the Commission and NFA 
will accomplish that goal.
---------------------------------------------------------------------------

    \1\ See 17 CFR Part 3 (Registration).
---------------------------------------------------------------------------

    The Commission and NFA should follow the lead of the Securities 
and Exchange Commission (``SEC'') and the Financial Industry 
Regulatory Authority (``FINRA'') in terms of how professional and 
disciplinary background information is disclosed to the potential 
customers of SEC-registered broker-dealers. FINRA's 
BrokerCheck[supreg] is a tool that provides potential customers with 
detailed information regarding the professional backgrounds of 
current and former FINRA-registered brokerage firms and brokers, as 
well as investment adviser firms and representatives.\2\ Through 
BrokerCheck[supreg], these customers can research certain criminal 
matters, regulatory actions, civil judicial proceedings, and 
financial matters in which the broker-dealer, one of its control 
affiliates, or representatives has been involved.
---------------------------------------------------------------------------

    \2\ For more information regarding BrokerCheck[supreg], see 
http://www.finra.org/Investors/ToolsCalculators/BrokerCheck.
---------------------------------------------------------------------------

    Today's futures markets need better technology solutions that 
will help futures customers make informed choices about the 
Commission-registered intermediaries with which they may wish to do 
business. Instead of promising to take action in the future, the 
Commission's final rule should do everything it can right now to 
protect customer funds. I believe the final rule should enable the 
public to receive access to information about current and formerly 
registered intermediaries who may seek to attain

[[Page 51910]]

---------------------------------------------------------------------------
positions of trust with potential futures customers.

[FR Doc. 2012-20962 Filed 8-27-12; 8:45 am]
BILLING CODE 6351-01-P