Proposed Rule

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PROPOSED AMENDMENTS

BYLAWS OF

NATIONAL FUTURES ASSOCIATION

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(Additions are underscored and deletions are stricken)

CHAPTER 4. MEMBER MEETINGS AND ELECTIONS

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Bylaw 406. Elections.

The Annual Election shall be held on the second third Tuesday in January, at which the contested vacancies on the Board and Nominating Committee shall be filled. Before the October 15 preceding the election, the Secretary shall:

(1) notify all Members in the FCM and LTM, IB, CPO and CTA categories of the elected Directors and the members of the Nominating Committee whose terms will expire at the Annual Election, and

(2) request the submission to the Nominating Committee of the names of eligible persons to fill those positions.

Before the November 20 preceding the election, the Nominating Committee shall submit its list of nominees for the positions to the Secretary, who shall promptly notify the Members of the nominations. Other nominations may be made by petition, as prescribed in the Articles. Each petition must identify the position to which the nomination pertains. Petitions must be received by the Secretary within 21 days of the issuance of the Secretary's notification of the candidates proposed by the Nominating Committee. Promptly after the expiration of the period within which petitions may be submitted, the Secretary shall notify the Members of all of the candidates for Director and member of the Nominating Committee. In the event of a contested election in any of the FCM and LTM, IB, or CPO and CTA categories, the Secretary shall cause written ballots to be sent to all Members in that category (i.e., FCM and LTM, IB, CPO or CTA) by December 15. Promptly after December 31 of the year immediately preceding the election, the Secretary shall request the contract market Members eligible to vote in accordance with Article VII, Section 2(a)(ii) to nominate eligible persons to represent such contract market Members. In the event of a contested election in the contract market category, the Secretary shall cause written ballots to be sent to all contract market Members eligible to vote by January 10.

Bylaw 407. Transitional Board Interim Board And Interim Committees.

The Provisional Board of Directors may elect a transitional Board of Directors. Such transitional Board shall be comprised in the manner set forth in Article VII and may hold office until the Directors elected by Members assume office. The transitional Board shall have the powers of the provisional Board of Directors (See Articles XVI and XVII), except the power to adopt, amend or repeal Articles.

The Directors holding office and all members of the Executive Committee, Nominating Committee, Appeals Committee and Membership Committee ("Committees") as of September 1, 2001 shall constitute an interim Board of Directors and interim Committees. The terms of all interim Directors and interim Committee Members shall end on the date of the Board’s regular annual meeting in 2002. The interim Board and interim Committees shall have all the powers of the Board of Directors and Committees, respectively except the power to adopt, amend or repeal Articles.

CHAPTER 5. BOARD OF DIRECTORS

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Bylaw 503. Removal of Directors.

Notwithstanding the provisions of Bylaw 515, Directors may be removed from office as follows:

(a) Any Director representing a contract Market Member described in Article VII, Section 2(a)(ii) and any FCM and LTM, IB or Industry Participant CPO and CTA Director may be removed by a majority of the Members eligible to elect the Director whenever, in their judgment, the best interests of NFA will be served thereby.

(b) Upon recommendation of the Executive Committee, any Director may be removed by two-thirds of the Directors present and voting at a duly convened meeting of the Board whenever, in their judgment, the best interests of NFA will be served thereby.

Bylaw 507. Special Meetings.

(a) General.

Special meetings of the Board shall be held at the request of the Chairman, the President, or any 10 Directors. The date and place of the meeting shall be determined by the Chairman and specified in the notice of the meeting.

(b) Notice of Emergencies.

Notice of each special meeting shall be provided in accordance with such procedures as the Board may specify by resolution. The Chairman shall cause notice of the meeting to be given at the earliest practicable time, and, except in unusual circumstances, at least two days before the date on which the meeting is to be held.

Attendance of a Director at the meeting shall constitute a waiver of notice of the meeting, except where a Director attends a meeting exclusively for the limited purpose of objecting to the transaction of any business thereat on the ground that the meeting shall be limited to the matters specified in the notice of such meeting.

In the event of an emergency (as defined herein), the Chairman or President may call a meeting on one-hour notice to all Directors. Such notice may be given by telephone, telegraph or other means. The business of the meeting shall be limited to the emergency. A quorum shall consist of 14 8 Directors, provided there is present at least one contract market Director, one FCM Director and one Industry Participant CPO, CTA or Public Representative Director (See Article VII, Sections 2(a)-(c)). For purposes of this Bylaw, an emergency shall exist when the Chairman or President determines that, because of an unusual, unforeseeable and adverse circumstance, it is necessary to hold a meeting on one hour notice.

CHAPTER 7. COMMITTEES

Bylaw 701. Membership Committee.

There shall be a Membership Committee, consisting of nine five Directors and four other persons. A majority of the Committee members eligible to participate in a proceeding shall constitute a quorum, except that in cases in which a Subcommittee has been designated a quorum shall consist of a majority of such Subcommittee members but no fewer than three. The Committee members shall be proposed by the President and appointed by the Board. The President and the Board shall endeavor to propose and appoint Directors and persons who reflect the various categories of Members described in the Articles. The Committee or its designated Subcommittee shall review actions taken by the President pursuant to the President's authority under Chapter 3 to make the initial determination regarding:

(a) applicants for membership in NFA or registration as Associates, and

(b) continued eligibility for such membership or registration.

Each Committee member shall serve for three two years, except for the initial Committee members the Committee members appointed at the Board’s regular annual meeting in 2002, whose terms shall be staggered, or until the member's successor is appointed and qualified, or until the member's death, resignation, ineligibility or removal. A Committee vacancy shall be filled in the manner prescribed in Bylaw 601 for officers. A Committee member may be removed by the Board whenever in its judgment the best interests of NFA will be served thereby.

Bylaw 702. Appeals Committee.

There shall be an Appeals Committee, consisting of nine five Directors, at least one of whom shall be a Public Director. A majority of the Committee members eligible to participate in a proceeding shall constitute a quorum. The Committee members shall be proposed by the President and appointed by the Board. The President and the Board shall endeavor to propose and appoint Directors who reflect the various categories of Members described in the Articles. The Committee shall hear and decide appeals from and reviews of decisions in disciplinary cases by the Business Conduct Committee under the Compliance Rules. Each Committee member shall serve for three two years, except for the initial Committee members and the Committee members appointed at the Board’s regular annual meeting in 2002, whose terms shall be staggered, or until the member's successor is appointed and qualified, or until the member's death, resignation, ineligibility or removal. A Committee vacancy shall be filled in the manner prescribed in Bylaw 601 for officers. A Committee member may be removed by the Board whenever in its judgment the best interests of NFA will be served thereby.

CHAPTER 13. DUES AND ASSESSMENTS

Bylaw 1301. Schedule of Dues and Assessments.

Subject to the provisions of Article XII, dues and assessments of Members shall be as follows:

(a) Contract Markets.

Each contract market Member shall pay to NFA an assessment calculated on the basis of $.01 for each round-turn transaction in a commodity futures contract (purchase and sale or sale and purchase) executed on the contract market, except that in any NFA fiscal year, the total of such assessments paid by a contract market Member that had transaction volume of more than 20 percent of aggregate contract market transaction volume during that fiscal year with two Directors on the Board shall not be more than $150,000 and the total of such assessments paid by a contract market Members that had transaction volume of 20 percent or less of aggregate contract market transaction volume during that fiscal year with one Director on the Board shall not be more than $100,000. A specific contract market's transaction volume shall be the number of commodity futures contracts entered into on the contract market. The aggregate contract market transaction volume shall be the number of such contracts entered into on all U.S. contract markets. The number of contracts entered into on a contract market shall be adjusted where necessary because of differences in sizes of contracts (e.g., one 5,000 oz. contract for a particular commodity would equal five 1,000 oz. contracts for that commodity for purposes of the computation).

(b) FCM Members.

(i) Each FCM Member shall pay to NFA an assessment equal to:

(A) $.18 for each commodity futures contract traded on a contract market (other than an option contract) on a round-turn basis;

(B) $.09 for each option contract traded on a contract market on a per trade basis, carried by it for a customer other than: (1) a person having privileges of membership on a contract market where such contract is entered; or (2) a business affiliate of such FCM that directly or indirectly owns 100 percent of or is owned 100 percent by or has 100 percent ownership in common with such FCM provided such FCM has privileges of membership on the contract market where such contract is entered; or (3) an omnibus account carried for another FCM Member for which assessments are payable to NFA by the other FCM;

(C) $.18 for each commodity futures contract traded on a foreign board of trade (other than an option contract) on a round-turn basis;

(D) $.09 for each option contract traded on a foreign board of trade on a per trade basis, carried by it for a customer other than on an omnibus account basis for another FCM Member for which assessments are payable to NFA by the other FCM; and

(E) $.09 for each dealer option contract on a per trade basis carried by it for a customer other than a business affiliate of such FCM that directly or indirectly owns 100 percent of or is owned 100 percent by or has 100 percent ownership in common with such FCM Member:

Provided, however, such assessments shall be suspended or adjusted by the Board for a period not to exceed three months when in the judgment of the Board such action is appropriate in light of NFA's overall financial goals. The FCM Member shall invoice these assessments to its customer and shall remit the amount due to NFA; and

(ii) Each FCM for which NFA serves as the DSRO, as defined in NFA Financial Requirements Section 2, shall pay to NFA annual dues of $5,000 and each FCM for which NFA does not serve as the DSRO as defined in NFA Financial Requirements Section 2, shall pay to NFA annual dues of $1,000.

(c) LTM Members.

(i) Each LTM Member shall pay to NFA an assessment equal to $.09 for each leverage contract purchased from or sold to the LTM by a customer: Provided, however, such assessments shall be suspended or adjusted by the Board for a period not to exceed three months when in the judgment of the Board such action is appropriate in light of NFA's overall financial goals. The LTM Member shall invoice these assessments to its customers and shall remit the amount due to NFA; and

(ii) Each LTM Member shall pay to NFA annual dues of $1,000.

(d) Other Members.

Annual dues for the other membership categories shall be as follows:

(i) Commodity Trading Advisor-$500
(ii) Commodity Pool Operator-$500
(iii) Introducing Broker-$500

Subject to category voting as prescribed by Article XI, Section 1(a), the Board may in its discretion waive or establish lower annual dues for particular Members.

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CHAPTER 15. MISCELLANEOUS PROVISIONS

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Bylaw 1506. Amendments to Bylaws.

No Bylaw may be adopted, amended or repealed except as specified in a written notice sent to each Director at least two weeks prior to the meeting at which the Board considers the same: Provided, however, that such prior notice is not required in an emergency as defined by Bylaw 507, or where a two-thirds majority of all Directors present and voting in each of the membership categories set forth in Sections 2(a)-2(c) of Article VII (Contract Markets, FCMs, LTMs, IBs, Industry Participant and Public Representatives) approves.

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