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Notice I-02-08

March 15, 2002

Online Registration System

In a continuing effort to provide our Members with the highest level of service excellence, NFA has designed an Internet-based electronic registration filing system that will be available to all applicants and registrants. This new Online Registration System (“Online Registration System” or “ORS”) will simplify and streamline applications, updates and terminations and create efficiencies for you, as users of the system. The Online Registration System has been designed and built to be user-friendly and to ensure that NFA efficiently registers those firms and individuals who are fit for registration. Because online registration will be mandatory once the system has been implemented, we wanted to take this opportunity to describe the system and its many benefits.

The ORS greatly simplifies the application and update process. The system is designed to lead the applicant down a “path” step by step so that by the end of the path, the applicant has filled in all applicable fields. Unlike a paper form, the system has logic that will only display those pages that are required for the type of business that the firm or individual will be conducting. Further, the application will display information that is currently in the system for the registrant or applicant. The disciplinary disclosure questions have also been revised and renumbered to streamline that review as well. With ORS, eligible AP applicants will receive Temporary Licenses (“TLs”) online.

In the paper environment, all communication about registration status or deficiencies in the application took place via regular mail. In the ORS environment, electronic notices on special web pages in the system will inform firms of registration-related activity. Information will be available on other pages that will allow firms to determine why an application for them or their APs and principals has not been approved. There will be, in most cases, immediate notification of an application’s status.

The ORS significantly reduces the number of hard copy documents necessary to complete the registration process. Moreover, firms will not be required to keep hard copies of any registration filing; the system is the record. Firms will have the ability to print the electronic filings they make pertaining to it and its APs, if they so choose.

NFA has implemented ample security mechanisms to ensure the integrity of the ORS. Firms will have access to the information in the system that pertains to it or its APs and will not be able to view the non-public information for any other firm or unaffiliated person. This process will rely heavily on the role of security manager. Each firm will be required to establish a security manager who will manage the firm’s security access. Members will be notified about how to establish security accounts in a separate mailing, which will be disseminated in the next few weeks. In the ORS, specially designated firm personnel must file all applications even if the APs or principals completed the information in the application. Upon submission, it will be the AP’s and principal’s responsibility to verify that the information filed was correct using a special password and user ID. The ORS will not be accessible to the general public; NFA’s BASIC system will continue to provide publicly available registration information.

Although NFA has designed the system for easy use, we are committed to providing Members with the training and guidance necessary to navigate the system. Toward that end, NFA will hold instructional sessions during which we will demonstrate the new system in Chicago, New York and another location, possibly Florida, in April and May. We will also develop an online tutorial for those Members who are unable to attend an instructional session, and there will be help text and a “frequently asked questions” section to guide you through the process. Likewise, although we anticipate that the new system will significantly reduce the need for NFA Members to call and check on the status of a registration application, NFA’s Information Center will continue to be available throughout the transition process and beyond, to support Members and answer questions. Additionally, NFA plans to provide registrants with workstations at NFA’s Chicago and New York offices to use to provide and update registration information. NFA will have staff responsible for support to those who choose to register in person.

It will be necessary to move the data from NFA’s existing mainframe registration database to the ORS database. Before we can do this, we will need to complete the entry of all existing paper applications into the mainframe database. Therefore, there will need to be a “quiet period” of about two weeks, slated to begin on May 17, during which NFA will not accept any registration filings or grant any registrations. In order to complete this process as smoothly as possible, there are several important dates that you must know. Beginning April 1, NFA will send a checklist of the information necessary for a complete filing to all firms that have filed incomplete applications for themselves, their principals or their APs. Additionally, NFA will return any incomplete application received after April 1 with a copy of the checklist. It is the firm’s responsibility to use the checklist to complete the filing and submit it by May 17. At that time, any incomplete applications will be withdrawn and the applicant will have to re-file the application when ORS is operational. Any application received after 5:00 p.m. CST on May 17 will be returned for entry into the new system. We currently expect that the quiet period will last two weeks; however, if we receive a rash of applications at the deadline, that will only prolong the quiet period and thus the time during which APs and firms may not become registered. While we are exploring the possibility of a “No-Action” position from the CFTC so that any AP who qualifies for a special TL may go to work for a firm during the quiet period, there is no assurance that such relief will be granted. Please submit applications early whenever possible. Under the plan, the ORS will be available for applications on June 3. We are already looking ahead to enhancements to the system based on user feedback as well.

The ORS will also benefit floor brokers and floor traders. In the new system, floor brokers and floor traders will be in control of their registration application process and will be treated more like firms than APs. They will establish themselves as security managers and submit all applications, although they may delegate the actual task of inputting their registration information. Further, in the new system, floor broker applicants who meet the eligibility requirements will receive a TL that will enable them to operate as a floor broker instead of being limited to trading only for their own account until full registration as a floor broker is granted, as is currently the case. For the convenience of floor brokers and floor traders, NFA’s kiosks in the Chicago and New York offices will be available for them to use. Additionally, NFA staff members will be available to provide any assistance.

With the new ORS, exchanges will find it easier to monitor the registration status of floor brokers and floor traders. The process by which floor brokers and floor traders are granted trading privileges will remain the same and can be completed online.

NFA is pleased to provide yet another innovative regulatory service to our Members. We are confident that the Online Registration System will be user-friendly and that it will create new efficiencies for our Members. Look for more detailed information regarding the system in the next few months. We welcome your comments about the electronic registration system. Please direct such comments to NFA’s Information Center at 800-621-3570 or 312-781-1410 or you can e-mail us at information@nfa.futures.org.

NFA is the premier independent provider of efficient and innovative regulatory programs that safeguard the integrity of the derivatives markets.
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