Member Newsletter

NFA's Directors took the following actions at their quarterly Board meeting in Chicago on August 19, 2004.

The FCM category representatives of the Board elected Christopher K. Hehmeyer to replace W. Robert Felker as a non-Top10 FCM representative on the Board. Mr. Hehmeyer is the co-chairman of Goldenberg, Hehmeyer & Co. Mr. Felker will fill the vacancy in the Top 10 FCM category caused by the resignation of Richard D. Berliand.

The Board approved the following committee appointments:

Finance Committee - Paul Georgy (FCM/IB representative); Robert E. Murray (CPO/CTA representative); Joseph J. O'Neill (Contract Market representative); and Susan M. Phillips (Public Representative).

Hearing Committee - Ronald S. Oppenheimer and Charles P. Nastro.

The Board adopted NFA Bylaw 1508 allowing NFA to enter into audit agreements with exchanges regarding security futures products. The Bylaw has been sent to the CFTC and the SEC for review.

The Board approved amendments to two NFA Interpretive Notices. Changes to the Interpretive Notice entitled "Forex Transactions with Forex Dealer Members" include the following:

• A Forex Dealer Member must disclose to its customers how it will be compensated for the services it will provide to the customer.

• A Forex Dealer Member must provide both the bid and the offer when the customer enters an order.

• A Forex Dealer Member must provide a written confirmation within one business day after any activity in the retail customer's account. The confirmation should include the details of the transaction as well as all commissions, costs, fees and other charges incurred by the customer in connection with the transaction, including commissions and similar charges collected on behalf of third-parties who introduce business to or manage accounts carried by the Forex Dealer Member.

• Any Member or Associate is prohibited from representing that its services are commission free without prominently disclosing how it is compensated in near proximity to that representation.

Changes to the Interpretive Notice entitled "Enhanced Supervisory Requirements" clarify that NFA's enhanced supervision requirements apply to the off-exchange retail forex activities of Members subject to NFA Compliance Rule 2-36.

The Board approved amendments to NFA's Financial Requirements to conform to recent changes to CFTC Regulations.

The Board approved a policy and procedure to address conflicts and dualities of interest.

The Board approved changes to the compensation paid to Directors for attending Board and Executive Committee meetings.

The Board approved proposals relating to non-Member involvement in NFA's Disciplinary and Membership Committee actions.

The Board approved an Interpretive Notice relating to third-party trading system developers.

The Board approved a resolution creating a benefit plan administration committee called the NFA Benefit Plan Trustees.