Notices to Members

August 24, 2007

Proposed Amendments to NFA's Articles of Incorporation for Changes to NFA's Board of Directors

On August 16, 2007, NFA's Board of Directors ("Board") unanimously ratified a proposal to amend NFA's Articles of Incorporation ("Articles") to restructure the contract market representation on NFA's Board and reduce it from six representatives to no more than five representatives.

EXPLANATION

Since February 2002,¹ NFA's Board has been comprised of twenty-five directors, including six contract market representatives. Article VII, Section 2(a) addresses contract market representation on the Board. Subsections 2(a)(i) and (ii) currently provide that NFA's Board shall include one representative of each contract market ranked in the top four contract market Members based on annual transaction volume during the prior calendar year and two elected representatives drawn from contract market Members not ranked in the top four.

With the CME Group Inc.'s recent acquisition of The Chicago Board of Trade ("CBOT"), the CBOT is no longer eligible to have a representative on NFA's Board since Article VII, Section 2(iv) provides that a contract market and all contract market Members with which it is affiliated shall have no more than one representative on the Board. Excluding the CBOT, NFA has seven contract market Members but only five of these exchanges have any significant volume.

The Board, therefore, determined to restructure the contract market representation on NFA's Board. In making this determination, the Board noted that fewer exchanges require Board seats today and, additionally, further exchange consolidation is likely to continue in the future.

The Board amended Article VII, Section 2(a) to provide that contract market representatives on NFA's Board be drawn from exchanges with annual transaction volume during the prior calendar year of more than 1,000,000. The Board also amended Section 2(a)(i) to provide that in the event that there are five or less contract market Members having annual transaction volume during the prior calendar year of more than 1,000,000, then the Board shall include one representative of each such exchange.

Additionally, Section 2(a)(ii)(b) was amended to provide that in the event that there are more than five contract market Members with annual transaction volume during the prior calendar year of more than 1,000,000, then the Board shall include: one representative of each exchange ranked in the top three based on annual transaction volume during the prior calendar year and two other elected representatives drawn from exchanges with annual transaction volume of more than 1,000,000 that are not ranked in the top three. Similar to the current contract market election procedure, in the event of a contested election, all contract market Members-other than the top three exchanges-will be eligible to vote for the two elected representatives.

The Board believes that this new structure not only provides sufficient flexibility in the likely event of further exchange consolidation but also allows for the possibility that exchanges with significant volume may want to become Members and seek to have a representative on the Board. In order to implement this new structure, necessary corresponding amendments have also been made to Section 3(e), Section 4(a) and Section 8 of Article VII and NFA Bylaws 406 and 503.

No changes were made to the composition of NFA's Executive Committee, which will continue to have a representative from of a contract market that had transaction volume of more than 20 percent of aggregate contract market transaction volume during the prior calendar year and a representative elected from those directors representing all other contract markets.

PROPOSED ARTICLES AMENDMENTS

The proposed amendments to Article VII are set forth below and incorporate the changes approved by NFA's Board as discussed above. Amendments to NFA's Articles require the affirmative vote of a majority of those Members actually voting in each Member category-Contract Market; FCM/LTM/IB; and CPO/CTA.

The proposed amendments to NFA Bylaws 406 and 503, which incorporate the changes approved by NFA's Board, are also set forth below. Amendments to NFA's Bylaws, however, do not require a vote by the membership. They are included here solely for the membership's information.

Please use the enclosed ballot to vote and fax it to NFA by September 24, 2007.

Section 2: Composition of Board.

The Board of Directors shall be comprised as follows:
(a) Contract Market Representatives.

(i) In the event that there are five (5) or less contract market Members having annual transaction volume during the prior calendar year of more than 1,000,000, then Oone representative of each such contract market Member ranked in the top four contract market Members based on annual transaction volume during the prior calendar year.

(ii) Two (2) elected representatives of contract market Members not ranked in the top four contract market Members based on annual transaction volume during the prior calendar year. Only contract market Members not represented in accordance with Section 2(a)(i) shall be eligible to vote for the representatives elected in accordance with this Section 2(a)(ii). In the event that there are more than five (5) contract market Members with annual transaction volume during the prior calendar year of more than 1,000,000:

(a) One representative of each contract market Member ranked in the top three (3) contract market Members based on annual transaction volume during the prior calendar year.

(b) Two (2) elected representatives of contract market Members with annual transaction volume during the prior calendar year of more than 1,000,000 that are not included in Section 2(a)(ii)(a) above. Only contract market Members not represented in accordance with Section 2(a)(ii)(a) shall be eligible to vote for the representatives elected in accordance with this Section 2(a)(ii)(b).

(iii) A specific contract market's annual transaction volume shall be the number of commodity futures contracts entered into on the contract market during the calendar year. 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).

(iv) A contract market Member and all contract market Members with which it is affiliated shall have no more than one representative on the Board at any one time. For the purposes of this limitation, a contract market Member shall be deemed to be affiliated with another contract market Member if it directly or indirectly owns 100 percent of or is owned 100 percent by or has 100 percent ownership in common with such other contract market Member.

Section 3: Nominations; Election.

The elected Directors shall be chosen as follows:

(e) Contract Markets

In the event of an election as The contract market representatives described in Article VII, Section 2(a)(ii)(b), the contract market representatives shall be elected as follows: Before the Annual Election, the Board shall solicit from contract market Members eligible to have representatives pursuant to described in Article VII, Section 2(a)(ii)(b) the nomination of individuals to serve on the Board as representatives of such contract market Members. If there is a contested election of such contract market Members, such the contract market Members eligible to vote pursuant to Article VII, Section 2(a)(ii)(b) shall thereafter elect by plurality vote from such nominees the Directors that will represent them. The election shall be conducted in the manner provided in the Bylaws, which shall provide for an Annual Election.

Section 4: Terms of Directors.

(a) Contract Market Directors.

Directors representing contract market Members shall serve for one-year terms, from the date of the Board's regular annual meeting as set forth in Bylaw 506 following the Annual Election at which they are elected until the date of the Board's regular annual meeting one year hence.

Section 8: Vacancies.

A vacancy that occurs on the Board before the expiration of a Director's term shall be filled (for the unexpired term) by an eligible individual elected by majority vote of the remaining Directors who represent the category of Members in which the vacancy occurred, except that if the vacancy involves a representative of a contract market Member described in Article VII, Section 2(a)(i), that contract market Member shall designate the successor. In the event there are no Directors remaining who represent the category of Members in which the vacancy occurred, the vacancy shall be filled by an eligible individual elected by the Board.

BYLAW 406. ELECTIONS.

The Annual Election shall be held on the 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 by December 15. Promptly after December 31 of the year immediately preceding the election, the Secretary shall notify request the contract market Members that shall have representatives on the Board during the current calendar year. Provided, however, that if an election is held pursuant to Article VII, Section 2(a)(ii)(b), then the Secretary shall request the contract market Members eligible to have a representative vote in accordance with Article VII, Section 2(a)(ii)(b) 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 in accordance with Article VII, Section 2(a)(ii)(b) by January 10.

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)(b) and any FCM and LTM, IB or 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.