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February 05, 1997
Via Facsimile and U.S. Mail
RE: Proposed Rulemaking concerning Contract Market Rule Rerview Procedures [61 F.R. 66241]
Dear Ms. Webb:
National Futures Association ("NFA") welcomes this opportunity to comment on the proposed rulemaking recently published by the Commodity Futures Trading Commission ("Commission") in the December 17, 1996 Federal Register. In that release, the Commission proposed changes to existing Commission regulations governing its review of contract market rule proposals which are designed to streamline and shorten the review process.
NFA fully supports the Commissions efforts to provide for a more efficient review of contract market rule proposals, while preserving the regulatory safeguards that such review provides. The proposed changes to the current review system are an important first step in that effort. Although the Commissions proposed timeframes are an improvement over the current system, NFA recognizes that further improvements may be possible. We urge the Commission to explore the possibility of further streamlining this process.
NFA also believes that the importance of timely rule review and approval is equally applicable to NFA. Although NFA does not compete in the global marketplace, our rule proposals are designed to address an ever changing industry and to help us effectively oversee our membership. Therefore, we recommend that the Commission extend the streamlined process adopted by the Commission with respect to non-terms and conditions of exchange rules to the review and approval of NFA rule submissions.
With regard to the specific rule proposal, NFA is not sure why sub-paragraph (c)(2) of proposed Registration Rule 1.41(c) states that rules "may be deemed approved or placed into effect, as appropriate," whereas, sub-paragraph(c)(3) states that rules "may be deemed approved or be placed into effect, as determined by the Commission." NFA requests clarification as to the significance of the difference in language in these two sections.
NFA also has concerns regarding the notification procedures related to the Commissions intention to institute a disapproval procedure under Regulation 1.41(c)(3). It is not clear from the Federal Register release whether the Commission notification will be done publicly. Since the contract market could agree to withdraw the rule or grant the Commission additional review time, NFA believes that public notification at this stage is unnecessary and might improperly cast a negative taint on the rule proposal. Moreover, Regulation 1.41(c)(4)(i)(B) seems to limit the Commission to a 180 day review period before instituting a disapproval proceeding. If a compromise is still possible, the exchanges and NFA should be able to grant the Commission additional time.
In conclusion, NFA supports the Commissions efforts in this area but also recommends that the Commission further study the area for added improvements.
Daniel J. Roth