FR Doc 2010-21726[Federal Register: September 10, 2010 (Volume 75, Number 175)]
[Notices]
[Page 55310-55312]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10se10-32]
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COMMODITY FUTURES TRADING COMMISSION
Performance of Registration Functions by National Futures
Association With Respect to Retail Foreign Exchange Dealers and
Associated Persons
AGENCY: Commodity Futures Trading Commission
ACTION: Notice and order
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SUMMARY: The Commodity Futures Trading Commission (``Commission'' or
``CFTC'') is authorizing the National Futures Association (``NFA''),
effective September 10, 2010, to process and grant applications for
initial registration, renewed registration and withdrawals of retail
foreign exchange dealers (``RFEDs'') and their associated persons
(``APs'') and to issue temporary licenses to eligible APs; to conduct
proceedings to deny, condition, suspend, restrict or revoke the
registration of any RFED or AP of an RFED, or an applicant for
registration in either category; and to maintain records regarding
RFEDs and their APs, and to serve as the official custodian of those
Commission records.
DATES: Effective Date: September 10, 2010.
FOR FURTHER INFORMATION CONTACT: For information contact: William
Penner, Deputy Director, Division of Clearing and Intermediary
Oversight, 1155 21st Street, NW, Washington, DC 20581. Telephone
number: 202-418-5450; facsimile number: 202-418-5547; and electronic
mail: [email protected]. Christopher Cummings, Special Counsel, Division
of Clearing and Intermediary Oversight, 1155 21st Street, NW.,
Washington, DC 20581. Telephone number (202) 418-5450; facsimile
number: 202-418-5547; and electronic mail: [email protected].
SUPPLEMENTARY INFORMATION:
I. Authority and Background
In a separate document published elsewhere in today's Federal
Register, the Commission is issuing final rules regarding the
regulation of off-exchange retail foreign exchange transactions and
intermediaries. The final rules follow the publication of proposed
rules on January 20, 2010,\1\ and represent a comprehensive regulatory
scheme to implement the requirements of the CFTC Reauthorization Act of
2008 (``CRA'') with regard to off-exchange retail forex
transactions.\2\ The
[[Page 55311]]
Commodity Exchange Act (``Act''),\3\ as amended by the CRA, provides
that the Commission's jurisdiction extends to off-exchange contracts of
sale of a commodity for future delivery (or an option on such a
contract) or an option (other than an option executed or traded on a
national securities exchange), and to certain off-exchange leveraged or
margined contracts in foreign currency that are offered to or entered
into with retail customers. Moreover, the CRA provides the Commission
with the authority to register persons serving as intermediaries or
counterparties to these transactions.
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\1\ See Regulation of Off-Exchange Retail Foreign Exchange
Transactions and Intermediaries; Proposed Rule, 75 FR 3282 (Jan. 20,
2010).
\2\ Food, Conservation, and Energy Act of 2008, Pub. L. 110-246,
122 Stat. 1651, 2189-2201 (2008).
\3\ 7 U.S.C. 1, et seq.
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Specifically, the CRA gives the Commission the authority to require
the registration of intermediaries who solicit retail customers to
participate in off-exchange forex contracts, who pool customer money
for the purpose of trading off-exchange currency contracts or who
manage customer money for this purpose. In the final rules published
today, the Commission has determined that these entities should be
registered in the existing categories of introducing broker (``IB''),
commodity pool operator (``CPO''), or commodity trading advisor
(``CTA''), as appropriate.
The CRA also authorizes the Commission to register entities that
serve as counterparties to such transactions, either within the
existing category of futures commission merchant (``FCM'') or as an
RFED, a new category of registrant. RFEDs are counterparties not
engaged primarily or substantially in the offer and sale of exchange-
traded futures (as opposed to FCMs, which are).\4\ The CRA provides
that RFEDs, their APs, and each of the other categories of registrants
discussed above, must be members of a registered futures association
such as the National Futures Association (``NFA'') and must register
with the Commission subject to such terms as the Commission may
prescribe.\5\
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\4\ Previously, firms serving as counterparties to retail forex
typically registered as FCMs, even though they may not have engaged
in exchange-traded futures business. Under the CRA, either FCMs or
RFEDs can offer to serve as counterparties to retail forex
transactions, but the entity must register as an FCM if primarily
and substantially engaged in on-exchange trading, or an RFED if not.
See, 7 U.S.C. 2(c)(2)(B)(i)(II)(cc) and (gg) and 7 U.S.C.
2(c)(2)(C)(i).
\5\ Id.
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The CFTC has previously authorized NFA to perform the full range of
registration functions with regard to FCMs, IBs, CTAs, CPOs and their
respective APs, including granting applications for initial
registration and renewed registration; enabling withdrawals and issuing
temporary licenses to eligible APs; and conducting proceedings to deny,
condition, suspend, restrict or revoke the registration of existing
registrants or applicants for registration in each category.\6\ By
today's order the Commission authorizes NFA to perform these functions
with regard to RFEDs and their APs.
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\6\ See 48 FR 15940 (Apr. 13, 1983); 48 FR 35158 (Aug. 3, 1983);
48 FR 51809 (Nov. 14, 1983); 49 FR 8226 (Mar. 5, 1984); 49 FR 39593
(Oct. 9, 1984); and 50 FR 34885 (Aug. 28, 1985).
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As proposed and adopted, Commission Regulations 5.3(a)(4) and (6)
require all those who meet the definition of an RFED, and any such
associated persons of RFEDs to register with the Commission in
accordance with part 3 of the Commission's Regulations. (17 CFR 3.1, et
seq.) Commission Regulation 3.2 provides that the registration
functions of the Commission are to be performed by the National Futures
Association. Upon consideration, the Commission has determined to
authorize NFA, effective September 10, 2010, to perform registration
functions with regard to RFEDs and their APs as set forth in part 3 of
the Commission's Regulations. Moreover, Section 17(o)(2) of the Act
provides that the Commission may authorize a registered futures
association, such as NFA, to perform Commission registration functions,
to deny, condition, suspend, restrict or revoke any registration,
subject to Commission review.\7\ The Commission is therefore also
authorizing NFA to take such actions with regard to RFED and AP
applicants as well as existing registrants in each of these categories.
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\7\ 7 U.S.C. 21(o)(2).
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The Commission further notes that it has, by prior orders,
authorized NFA to maintain various Commission registration records, and
has certified NFA as the official custodian of such records for the
Commission.\8\ The Commission has determined, in accordance with its
authority under section 8a(10) of the Act, to authorize NFA to maintain
and serve as official custodian of the Commission's registration
records with respect to RFEDs and their APs.
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\8\ See 49 FR 39593 (Oct. 9, 1984) and 66 FR 43227 (Aug. 17,
2001).
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In maintaining the Commission's registration records pursuant to
this Order, NFA shall be subject to all other requirements and
obligations imposed upon it by the Commission in existing or future
Orders or regulations. In this regard, NFA shall also implement such
additional procedures (or modify existing procedures) as are necessary
to ensure the security and integrity of these records as may be
acceptable to the Commission; to facilitate prompt access to these
records by the Commission and its staff; to facilitate disclosure of
public or nonpublic information in those records when permitted by
Commission Orders or rules, and to keep logs as required by the
Commission concerning disclosures of nonpublic information; and
otherwise to safeguard the confidentiality of the records.
II. Conclusion and Order
The Commission has determined, in accordance with the provisions of
Sections 2(c)(2)(B), 2(c)(2)(C), and 8a(10) of the Act, to authorize
NFA, effective September 10, 2010 to perform the following registration
functions:
(1) To process and grant applications for initial registration,
renewed registration and withdrawals from registration of retail
foreign exchange dealers (``RFEDs'') and their associated persons
(``APs'') and to issue temporary licenses to eligible APs;
(2) To conduct proceedings to deny, condition, suspend, restrict or
revoke the registration of any RFED or AP of an RFED, or any applicant
for registration in either category; and
(3) To maintain records regarding RFEDs and their APs, and to serve
as the official custodian of those Commission records.
NFA shall perform these functions in accordance with the standards
established by the Act and the regulations promulgated thereunder. NFA
shall follow the same procedures with respect to recordkeeping,
disclosure and tracking of fitness investigations and adverse action
proceedings concerning RFEDs and their APs as it must follow in cases
involving FCMs, IBs, CPOs, CTAs, and their respective APs.
These determinations are based upon the Congressional intent
expressed in sections 2(c)(2)(B), 2(c)(2)(C), 8a(10) and 17(o) of the
Act. This Order does not, however, authorize NFA to accept or act upon
requests for exemption from registration, or to render ``no-action'' or
interpretive letters with respect to applicable registration
requirements.
Nothing in this Order, or in sections 2(c)(2)(B), 2(c)(2)(C),
8a(10) and 17(o) of the Act, shall affect the Commission's authority to
review the performance by NFA of Commission registration functions.\9\
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\9\ See also section 17(o)(3) of the Act, 7 U.S.C. 21(o)(3).
[[Page 55312]]
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Issued in Washington, DC, on August 26, 2010.
David A. Stawick,
Secretary of the Commission.
[FR Doc. 2010-21726 Filed 9-9-10; 8:45 am]
BILLING CODE P
Last Updated: September 10, 2010