[Federal Register Volume 79, Number 80 (Friday, April 25, 2014)]
[Notices]
[Pages 23027-23028]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-09394]
[[Page 23027]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-71980; File No. SR-NFA-2014-02]
Self-Regulatory Organizations; National Futures Association;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Relating to Interpretive Notice Entitled ``NFA Compliance Rule 2-30(b):
Risk Disclosure Statement for Security Futures Contracts''
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, II, and
III below, which Items have been substantially 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 with the Commodity Futures Trading Commission
(``CFTC'').
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\1\ 15 U.S.C. 78s(b)(7).
\2\ 17 CFR 240.19b-7.
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On December 5, 2013, NFA requested that the CFTC make a
determination that review of the proposed rule change of NFA is not
necessary.\3\ On March 21, 2014, the CFTC notified NFA that the CFTC
had determined not to review the proposed rule change.\4\
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\3\ See Letter dated December 5, 2013, from Thomas W. Sexton,
III, Senior Vice President/General Counsel, NFA, to Melissa D.
Jurgens, Secretary, Office of the Secretariat, CFTC.
\4\ See Letter dated March 21, 2014, from Gary Barnett,
Director, Division of Swap Dealer and Intermediary Oversight, CFTC,
to Thomas W. Sexton, III, Senior Vice President/General Counsel,
NFA.
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I. Self-Regulatory Organization's Description and Text of the Proposed
Rule Change
The amendments to NFA's Interpretive Notice 9050 entitled ``NFA
Compliance Rule 2-30(b): Risk Disclosure Statement for Security Futures
Contracts'' (``Interpretive Notice 9050'') make a minor change to the
settlement section of the risk disclosure statement for security
futures contracts (``Statement'') to reflect an alternative settlement
and clearance process that will be used for a new security futures
product (``SFP''). The proposed rule change would accommodate the
clearing of physically-settled single stock futures (``SSFs'') on a
shorter time frame than three business days after the maturity date of
each such physically-settled SSF.
The text of the proposed rule change is available on NFA's Web site
at www.nfa.futures.org, at the principal office of NFA 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 these 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 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
Interpretive Notice 9050 applies to all Members and persons associated
with Members (``Associates'') who meet the criteria outlined in
Interpretive Notice 9050.
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\5\ 15 U.S.C. 78o-3(k).
\6\ 15 U.S.C. 78o(b)(11).
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Interpretive Notice 9050 requires NFA Members and Associates who
are registered as brokers or dealers under Section 15(b)(11) of the
Exchange Act to provide the Statement to a customer at or before the
time the Member approves the account to trade SFPs. The Statement is a
uniform disclosure that was jointly developed in 2002 by NFA, the
Financial Industry Regulatory Authority (``FINRA'') (then known as
NASD) and a number of securities and futures exchanges. Among other
things, the Statement describes the features of SFPs, including the
settlement process.
The amendment makes a minor change to the settlement section of the
Statement to reflect an alternative settlement process that will be
used for a new SFP, namely SSFs. In addition, FINRA intends to make the
same modifications to its risk disclosure statement for security
futures contracts to cover its members, and has proposed a similar rule
change.
Amendments to Interpretive Notice 9050 were previously filed with
the SEC in SR-NFA-2002-05, Exchange Act Release No. 34-46613 (October
7, 2002), 67 FR 64176 (October 17, 2002); SR-NFA-2002-06, Exchange Act
Release No. 34-47150 (January 9, 2003), 68 FR 2381 (January 16, 2003);
SR-NFA-2007-07, Exchange Act Release No. 34-57142 (January 14, 2008),
73 FR 3502, (January 18, 2008); SR-NFA-2010-02, Exchange Act Release
34-62624 (August 2, 2010), 75 FR 47666 (August 6, 2010); and SR-NFA-
2010-03, Exchange Act Release 34-62651 (August 4, 2010), 75 FR 48393
(August 10, 2010).
2. Statutory Basis
NFA believes that the proposed rule change is consistent with
Section 15A(k)(2)(B) of the Exchange Act.\7\ That section requires NFA
to have rules that are designed to prevent fraudulent and manipulative
acts and practices, to promote just and equitable principles of trade,
and, in general, to protect investors and the public interest,
including rules governing sales practices of security futures products.
NFA believes the proposed rule change accomplishes this by changing the
Statement to include reference to an alternative settlement process
that will be for a new SFP, namely SSFs.
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\7\ 15 U.S.C. 78o-3(k)(2)(D).
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B. Self-Regulatory Organization's Statement on Burden on Competition
NFA does not believe the proposed rule change would impose any
burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Exchange Act as amended.\8\ The
proposal does not impose new requirements on Members, but rather will
change the settlement section of the Statement to reflect an
alternative settlement process that will be used for a new SFP, namely
SSFs.
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\8\ 15 U.S.C. 78q-1(b)(3)(l).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
NFA filed the proposed rule change with the CFTC on December 5,
2013.\9\
[[Page 23028]]
On March 21, 2014, the CFTC notified NFA that the CFTC had determined
not to review the proposed rule change.\10\
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\9\ See Letter dated December 5, 2013, from Thomas W. Sexton,
III, Senior Vice President/General Counsel, NFA, to Melissa D.
Jurgens, Secretary, Office of the Secretariat, CFTC.
\10\ See Letter dated March 21, 2014, from Gary Barnett,
Director, Division of Swap Dealer and Intermediary Oversight, CFTC,
to Thomas W. Sexton, III, Senior Vice President/General Counsel,
NFA.
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NFA did not file the proposed rule changes concurrently with the
SEC. Instead, NFA filed the proposed rule changes on April 7, 2014.
Section 19(b)(7)(B) of the Exchange Act provides that a proposed rule
change filed with the SEC pursuant to Section 19(b)(7)(A) of the
Exchange Act shall be filed concurrently with the CFTC.
Section 19(b)(7)(C) of the Exchange 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 Exchange Act] may
be enforced by such self-regulatory organization to the extent such
rule is not inconsistent with the provisions of this chapter, the rules
and regulations thereunder, and applicable Federal law.'' At any time
within 60 days of the date of effectiveness of the proposed rule
change, the Commission, after consultation with the CFTC, may summarily
abrogate the proposed rule change and require that the proposed rule
change be refiled in accordance with the provisions of Section 19(b)(1)
of the Exchange Act.
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 Exchange 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-2014-02 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-2014-02. 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 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, 100 F Street NE., Washington,
DC 20549, on official business days between the hours of 10 a.m. and 3
p.m. Copies of such filing also will be available for inspection and
copying at the principal office 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 publicly available. All submissions
should refer to File Number SR-NFA-2014-02 and should be submitted on
or before May 16, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(73).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-09394 Filed 4-24-14; 8:45 am]
BILLING CODE 8011-01-P