Proposed Rule

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EXPLANATION OF PROPOSED AMENDMENTS

NFA's Articles currently provide a total of 14 seats on the Board for FCM representatives. These seats are divided among three subcategories of FCMs which are based on the number of offices operated by the FCM. Thus, there are two representatives for FCMs with 1-15 offices, two representatives for FCMs with 16-50 offices, and six representatives for FCMs with 51 or more offices. In addition, four representatives are chosen "at large" from FCMs with 50 offices or less.

At the request of this year's Nominating Committee, the Board reviewed the Articles regarding FCM Board representation with an eye toward injecting more flexibility into the current selection process. Previous Nominating Committees have raised similar concerns, prompted by the dwindling number of FCM Members in the 1-15 and 16-50 branch office categories. The Board responded in 1992 by amending the Articles to reduce the required number of representatives from each category from four to three and creating two "at large" positions which could be filled from either category. In 1996 the Executive Committee created an ad hoc group of FCM representatives to further review the issue, and, based on that group's recommendations, the Articles were amended again to reduce the required number of representatives from each category to two and to create two additional "at large" positions. This year, though, the Nominating Committee's concerns focused on the 51 and above office category and on the geographical restrictions imposed by the Articles.

The Articles currently provide that FCMs with 51 or more branch offices are entitled to six positions on NFA's Board of Directors. While recognizing that these FCMs should be assured adequate representation on the Board, the Nominating Committee felt that reducing the number of positions allotted to FCMs with 51 or more offices and increasing the number of "at large" positions would provide the Nominating Committee with greater flexibility in selecting the most qualified candidates. Therefore, the Board amended Article VII, Section 2(b)(i), to reduce the required number of representatives in the 51 and above office category to five and to create an additional "at large" position to provide five FCM representatives from any branch office category. This amendment maintains the total of 14 seats on the Board for FCM representatives and provides the Nominating Committee with more flexibility in selecting FCM director candidates.

The Nominating Committee also recommended eliminating the requirement in the Articles that no more than half of the FCM directors may come from the same region. The Nominating Committee felt that the interests of the FCMs do not vary along geographical lines and although the geographical restriction may have been politically expedient when NFA was being formed, the restriction has outlived any usefulness and should be eliminated. The Board determined that this reasoning should be applied equally to all categories of membership and, therefore, amended Articles V, VII, VIII and XVIII to eliminate the geographical restrictions related to Board and Executive Committee representatives in all categories of membership.

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