[Federal Register Volume 79, Number 80 (Friday, April 25, 2014)]
[Notices]
[Pages 23028-23030]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-09391]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-71976; File No. SR-NFA-2014-01]
Self-Regulatory Organizations; National Futures Association;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change to
the Interpretive Notice to NFA Compliance Rules 2-7 and 2-24 and
Registration Rule 401: Proficiency Requirements for SFPs
April 21, 2014.
Pursuant to Section 19(b)(7) of the Securities Exchange Act of 1934
(``Exchange Act''),\1\ and Rule 19b-7 under the Exchange Act,\2\ notice
is hereby given that on April 7, 2014, National Futures Association
(``NFA'') filed with the Securities and Exchange Commission (``SEC'' or
``Commission'') the proposed rule change described in Items I and II
below, which Items have been prepared by NFA. The Commission is
publishing this notice to solicit comments on the proposed rule change
from interested persons. NFA also filed this proposed rule change on
November 20, 2012 with the Commodity Futures Trading Commission
(``CFTC'').
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\1\ 15 U.S.C. 78s(b)(7).
\2\ 17 CFR 240.19b-7.
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NFA, on November 20, 2012, requested that the CFTC make a
determination that review of the proposed rule change of NFA is not
necessary.\3\ On February 14, 2013, the CFTC notified NFA that it had
determined not to review the proposed rule change.\4\
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\3\ See Letter dated November 20, 2012 from Thomas W. Sexton,
III, Senior Vice President/General Counsel, NFA to Sauntia Warfield,
Assistant Secretary, Office of the Secretariat, CFTC.
\4\ See Letter dated February 14, 2013 from Gary Barnett,
Director, Division of Swap Dealer and Intermediary Oversight, to
Thomas W. Sexton, III, Senior Vice President/General Counsel, NFA.
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I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
The amendments to the Interpretive Notice entitled ``NFA Compliance
Rules 2-7 and 2-24 and Registration Rule 401: Proficiency Requirements
for Security Futures Products'' (``Notice'') extends the relief from
having to take a proficiency exam to engage in security futures
activities from December 31, 2012 to December 31, 2015.
The text of the Interpretive Notice is available on NFA's Web site
at www.nfa.futures.org, the Commission's Web site at www.sec.gov, the
self-regulatory organization's office, and at the Commission's Public
Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, NFA included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. NFA has prepared summaries, set forth in sections A, B,
and C below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
Section 15A(k) of the Exchange Act \5\ makes NFA a national
securities association for the limited purpose of
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regulating the activities of NFA Members (``Members'') who are
registered as brokers or dealers under Section 15(b)(11) of the
Exchange Act.\6\ NFA's Notice entitled: ``NFA Compliance Rules 2-7 and
2-24 and Registration Rule 401: Proficiency Requirements for Security
Futures Products'' applies to all Members who meet the criteria in the
Interpretive Notice and could apply to Members registered under Section
15(b)(11) of the Exchange Act.
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\5\ 15 U.S.C. 78o-3(k).
\6\ 15 U.S.C. 78o(b)(11).
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The Commodity Futures Modernization Act of 2000 amended the
Securities Exchange Act of 1934 to require NFA to ``have rules that
ensure that members and natural persons associated with members meet
such standards of training, experience and competence necessary to
effect transactions in security futures products and are tested for
their knowledge of securities and securities futures products.'' \7\ In
2001 NFA and FINRA (then NASD) adopted temporary relief allowing
registrants to qualify to engage in security futures activities by
completing a training program rather than by taking an exam, which NFA
codified in the Notice. The relief was extended three times and was set
to expire on December 31, 2012.
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\7\ Section 15A(k)(2)(D) of the Exchange Act.
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NFA and FINRA proposed the three prior extensions, and the CFTC and
SEC agreed to them,\8\ because of the low trading volume in SFPs and
the relatively few registrants engaging in security futures activities.
These characteristics continue to make the imposition of a
qualifications exam an inefficient option, and the same reasons are
equally compelling today. Accordingly, the proposal revises the
Interpretive Notice to extend the relief from having to take an exam
from December 31, 2012 to December 31, 2015.\9\
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\8\ The Commission notes that the filings referred to by NFA
were filed with the Commission pursuant to Section 19(b)(7) of the
Exchange Act and thus were effective on filing by the NFA.
\9\ FINRA staff has informed NFA that FINRA will amend its rules
to incorporate the same three-year extension.
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Amendments to the Interpretive Notice regarding NFA Compliance
Rules 2-7 and 2-24 and Registration Rule 401: Proficiency Requirements
for Security Futures Products were previously filed with the SEC in SR-
NFA-2002-04, Exchange Act Release No. 34-46502 (Sep. 16, 2002), 67 FR
59587 (Sep. 23, 2002); SR-NFA-2003-03, Exchange Act Release No. 34-
47825 (May 9, 2003), 68 FR 27128 (Mar. 19, 2002); SR-NFA-2003-04,
Exchange Act Release No. 34-49054 (Jan. 12, 2004), 69 FR 2806, (Jan.
20, 2004); SR-NFA-2007-07, Exchange Act Release 34-57142 (Jan. 14,
2008), 73 FR 3502 (Jan. 18, 2008) and SR-NFA-2009-02, Exchange Act
Release 34-61284 (Jan. 4, 2010), 75 FR 1431 (Jan. 11, 2010).
2. Statutory Basis
The rule change is authorized by, and consistent with, Section
15A(k)(2)(D) of the Exchange Act.\10\ That Section requires NFA to
``have rules that ensure that members and natural persons associated
with members meet such standards of training, experience, and
competence necessary to effect transactions in SFPs and are tested for
their knowledge of securities and securities futures products.''
Although the proposal extends relief from having to take an exam to
engage in security futures activities, it still requires that training
be completed before entering into such activities.
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\10\ 15 U.S.C. 78o-3(k)(2)(D).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The proposed rule change will have little or no impact on
competition. The proposed Interpretive Notice does not impose new
requirements on Members, but rather extends the relief allowing
registrants to qualify to engage in security futures activities by
completing a training program rather than by taking an exam until
December 31, 2015.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
NFA did not publish the rule change to the membership for comment.
NFA did not receive comment letters concerning the rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
NFA filed the proposed rule change with the CFTC on November 20,
2012, and the proposed rule change became effective with the CFTC on
February 21, 2013. NFA did not file the proposed rule change concurrent
with the SEC. Instead, NFA filed the proposed rule change with the SEC
on April 7, 2014.\11\
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\11\ Section 19(b)(7)(B) of the Act provides that a proposed
rule change filed with the SEC pursuant to section 19(b)(7)(A) of
the Act shall be filed concurrently with the CFTC.
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At any time within 60 days of the date of effectiveness \12\ of the
proposed rule change, the Commission, after consultation with the CFTC,
may summarily abrogate the proposed rule change and require that the
proposed rule change be refiled in accordance with the provisions of
Section 19(b)(1) of the Act.\13\
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\12\ Section 19(b)(7)(C) of the Act provides, inter alia, that
``[a]ny proposed rule change of a self-regulatory organization that
has taken effect pursuant to [Section 19(b)(7)(B) of the Act] may be
enforced by such self-regulatory organization to the extent such
rule is not inconsistent with the provisions of this title, the
rules and regulations thereunder, and applicable Federal law.''
\13\ 15 U.S.C. 78s(b)(7)(C).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-NFA-2014-01 on the subject line.
Paper Comments:
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-NFA-2014-01. This file
number should be included on the subject line if email is used.
To help the Commission process and review your comments more
efficiently, please use only one method. The Commission will post all
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml.) Copies of the submission, all subsequent amendments,
all written statements with respect to the proposed rule change that
are filed with the Commission, and all written communications relating
to the proposed rule change between the Commission and any person,
other than those that may be withheld from the public in accordance
with the provisions of 5 U.S.C. 552, will be available for Web site
viewing and printing in the Commission's Public Reference Room on
official business days between the hours of 10:00 a.m. and 3:00 p.m.
Copies of such filing also will be available for inspection and copying
at the principal offices of NFA. All comments received will be posted
without change; the Commission does not edit personal identifying
information from submissions. You should submit only information that
you wish to make available publicly. All
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submissions should refer to File Number SR-NFA-2014-01, and should be
submitted on or before May 16, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-09391 Filed 4-24-14; 8:45 am]
BILLING CODE 8011-01-P