Proposed Rule

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Proposed New Bylaw And Amendments
(Additions are underscored)

BYLAWS
OF
NATIONAL FUTURES ASSOCIATION

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CHAPTER 5
BOARD OF DIRECTORS

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BYLAW 516. VOTING BY INTERESTED DIRECTORS.

No Director may deliberate or vote on any matter that the Director is prohibited from voting on by CFTC Regulation 1.69(b)(1)(i). A Director who is prohibited from deliberating or voting on a matter must disclose to NFA staff both the prohibition and the reason for the prohibition before the Board considers the matter.

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CHAPTER 7
COMMITTEES

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BYLAW 708. QUALIFICATIONS AND OBLIGATIONS OF MEMBERS OF NFA COMMITTEES.

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(c) No member of any NFA Committee or subcommittee may deliberate or vote on any matter that the member is prohibited from voting on by CFTC Regulation 1.69(b)(1)(i). A member who is prohibited from deliberating or voting on a matter must disclose to NFA staff both the prohibition and the reason for the prohibition before the Committee or subcommittee considers the matter.

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COMPLIANCE RULES

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Part 3 - COMPLIANCE PROCEDURES

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RULE 3-2. INVESTIGATION

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(c) Review of Report

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No member of the Business Conduct Committee or its designated Panel shall participate in the matter if the member, or any person with which the member is connected, has a financial, personal or other direct interest in the matter under consideration or is disqualified under Bylaw 708(c).

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RULE 3-9. HEARING.

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No member of the Hearing Panel shall participate in the matter if the member, or any person with which the member is connected, has a financial, personal or other direct interest in the matter under consideration or is disqualified under Bylaw 708(c).

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RULE 3-13. APPEAL; REVIEW.

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(d) Conduct of Proceeding.

No member of the Appeals Committee shall participate in the proceeding if the member participated in any prior stage of the disciplinary proceeding (other than the review of a settlement offer submitted under Rule 3-11) or if the member, or any person with which the member is connected, has a financial, personal or other direct interest in the matter under consideration or is disqualified under Bylaw 708(c). Except for good cause shown, the appeal or review shall be conducted solely on the record before the Hearing Panel, the written exceptions filed under paragraph (a) above, and such written or oral arguments of the parties as the Appeals Committee may authorize.

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RULE 3-15. MEMBER OR ASSOCIATE RESPONSIBILITY ACTIONS.

(a) Nature of Action.

A Member or Associate may be summarily suspended from membership, or association with a Member, may be required to restrict its operations (e.g., restrictions on accepting new accounts), or may otherwise be directed to take remedial action, where the President, with the concurrence of the NFA Board of Directors or Executive Committee, has reason to believe that the summary action is necessary to protect the commodity futures markets, customers, or other Members or Associates. No member of either the Board of Directors or the Executive Committee shall participate in a summary action if the member, or any person with whom the member is connected, has a financial, personal or other direct interest in the matter under consideration or is disqualified under Bylaw 516 or Bylaw 708(c). Notice of such summary action shall be given to the Commission.

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REGISTRATION RULES

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PART 500. PROCEEDINGS TO DENY, CONDITION, SUSPEND, RESTRICT, AND REVOKE REGISTRATION

RULE 501. AUTHORITY TO DENY, CONDITION, SUSPEND, RESTRICT AND REVOKE REGISTRATION.

(a) Registration of Futures Commission Merchants, Introducing Brokers, Commodity Pool Operators, Commodity Trading Advisors, Leverage Transaction Merchants, Agricultural Trade Option Merchants and Associated Persons. NFA may refuse to register or register conditionally any person registered or applying for registration as an FCM, IB, CPO, CTA, LTM, ATM or as an AP of any of the foregoing, or suspend, restrict or revoke the registration of any registrant in those categories, based upon the standards of fitness set forth in the Act. Interim Orders and Final Orders denying, revoking, conditioning, suspending or restricting registration shall be made by the Membership Committee or a designated Subcommittee in accordance with the procedures set forth in Part 500 of these Rules. Such designated Subcommittee shall consist of three members of the Membership Committee. In cases submitted by the President to the Membership Committee or a designated Subcommittee, registration shall not be granted pending a final determination by the Membership Committee or a designated Subcommittee. No member of the Membership Committee or a designated Subcommittee shall either review a registration matter or participate in a registration action if the member, or any person with whom the member is connected, has a financial, personal or other direct interest in the matter under consideration or is disqualified under Bylaw 708(c).

(b) Registration of Floor Brokers and Floor Traders. NFA may refuse to register or register conditionally any person applying for registration as a floor broker or floor trader, or suspend, restrict or revoke the registration of any person registered as a floor broker or floor trader, based upon the standards of fitness set forth in the Act. Interim Orders and Final Orders denying, revoking, conditioning, suspending or restricting registration as a floor broker or floor trader shall be made by the Membership Committee or a designated Subcommittee in accordance with the procedures set forth in Part 500 of these Rules. Such designated Subcommittee shall consist of at least three persons, the majority of whom are members of the Membership Committee and the remainder of whom are registered floor brokers or floor traders approved by NFA's Board of Directors to be a member of such Subcommittee. In cases submitted by the President to the Membership Committee or a designated Subcommittee, registration shall not be granted pending a final determination by the Membership Committee or a designated Subcommittee. No member of the Membership Committee or a designated Subcommittee shall either review a registration matter or participate in a registration action if the member, or any person with whom the member is connected, has a financial, personal or other direct interest in the matter under consideration or is disqualified under Bylaw 708(c).

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