Notices to Members

May 24, 1996

Proposed Amendments to NFA'S Articles of Incorporation

Introduction
On May 16, 1996, NFA's Board of Directors ("Board") ratified a proposal to amend Article VII of NFA's Articles of Incorporation ("Articles") to change the allocation of FCM seats on the Board by increasing the number of at-large directors by two and decreasing the number of directors in each of the 16-50 and 1-15 branch office categories by one.

Explanation of 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 branch offices operated by the FCM. Thus, there are six representatives for FCMs with 51 or more branch offices, three representatives for FCMs with 16-50 branch offices, and three representatives for FCMs with 1-15 branch offices. In addition, two representatives are chosen "at large" from FCMs with 50 branch offices or less. The total number of FCM directors and the subcategories have remained unchanged since the inception of NFA, and the only changes to the distribution of directors among the subcategories occurred in 1992 when the two "at large" seats were created.

The number of FCMs in the 1-15 and 16-50 categories has dropped significantly over the years. There were 323 FCMs in the 1-15 category in 1986 compared to 214 today. Even this number is inflated, since 75 FCMs in the 1-15 category paid no assessment fees to NFA last year. The 16-50 category has dropped from 22 to 12 in that same time period. Of the 12 FCMs in the 16-50 category, six paid no assessment fees to NFA. Thus, the number of potential Board members in each of these categories, and particularly in the 16-50 group, is quite limited.

After considering several alternatives to the current structure for these two categories of FCM representatives, the Board determined to increase the number of "at large" representatives from two to four and change the minimum number of directors to be drawn from each of the 16-50 and 1-15 categories to two. This approach provides for at least two representatives from each of the two categories with the remaining four drawn from either. This will provide the Nominating Committee with greater flexibility in selecting candidates.

Proposed Amendments
The proposed amendments to Article VII are set forth below. Additions are underscored and deletions are placed within brackets.

PLEASE NOTE: The Article amendments set forth below require the affirmative vote of two-thirds of those Members actually voting in the Contract Market category and a majority of those Members actually voting in the FCM, LTM and IB category and the Industry Participant (CPO and CTA) category.

Please use the enclosed ballot to vote and submit it to NFA by (30 days from date of Notice) in the postage-paid, self-addressed envelope which is also enclosed.

Section 2: Composition of Board.
The Board of Directors shall be comprised as follows:

(b) Futures Commission Merchant, Leverage Transaction Merchant, and Introducing Broker Representatives.

(i) Seventeen (17) elected representatives of registered Futures Commission Merchant (hereinafter "FCM") Members, registered Leverage Transaction Merchant (hereinafter "LTM") Members, and registered Introducing Broker (hereinafter "IB") Members, divided as follows:

(A) [Three] Two representatives of FCMs and LTMs having 1-15 offices.

(B) [Three] Two representatives of FCMs and LTMs having 16-50 offices.

(C) [Two] Four representatives of FCMs and LTMs from either category A or B above.

(D) Six representatives of FCMs and LTMs having 51 or more offices.

(E) One representative of IBs required to maintain minimum adjusted net capital.

(F) One representative of IBs not required to maintain minimum adjusted net capital.

(G) One representative of IBs from either category E or F above.

An FCM and LTM Member's offices shall include the offices of any affiliate through which offices the FCM or LTM Member conducts its FCM or LTM business.

ARTICLE VII, Section 2(b)(i)

(Amendment to change the way FCM seats on the Board are allocated by increasing the number of at-large directors by two and decreasing the number of directors in each of the 16-50 and 1-15 categories by one.)

APPROVE _____
DISAPPROVE _____

THIS BALLOT MUST BE HAND-DELIVERED TO NFA OR POSTMARKED NO LATER THAN (30 DAYS FROM DATE OF NOTICE)