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The value of building strong relationships

In the 17th century the English poet John Donne wrote, "No man is an island." I believe that if Mr. Donne were a businessman in the fast-paced 21st century, he might also write, "No organization is an island." To prosper and take advantage of opportunities as they arise, a business must establish a myriad of relationships with other organizations as well as influential individuals.

As a self-regulatory organization, NFA has developed productive relationships with congressional oversight committees, the CFTC, industry leaders and our Members. But our biggest challenge lies directly ahead of us. The Commodity Futures Modernization Act of 2000 (CFMA) provides NFA with many opportunities to establish new relationships with a variety of organizations-relationships that will strengthen NFA's position in the financial services industry.

The CFMA sets out a key role for NFA in the regulation of security futures contracts. Since these products will be regulated as both futures and securities, NFA must become recognized as a "limited purpose national securities association" and will be subject to oversight by both the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).

During the past several weeks, NFA has met with representatives of the SEC and the NASD Regulation, Inc. (NASDR) to ensure that firms that intend to trade these new products are not subject to inconsistent regulatory requirements. (For a more detailed report on our efforts in this area, see the article on page one of this newsletter.)

As NFA begins the process to seek approval to become a limited purpose national securities association, we must ensure that the congressional committees with oversight responsibilities for the SEC also understand our self-regulatory role and its associated benefits. We have been very successful in the past in developing strong relationships with the congressional agriculture committees that have CFTC oversight responsibilities. In fact, these committees turned to NFA in 1999 to develop a "Futures, Derivatives and Public Policy Roundtable" in Washington. The Roundtable was successful in bringing a broad range of issues facing the derivatives industry to the attention of Congress.

In light of NFA's increased scope of responsibilities, we must now begin making ourselves known to the Senate Committee on Banking, Housing and Urban Affairs, the House Committee on Commerce and the newly created House Committee on Financial Services. We are currently developing a plan that will ensure that the appropriate congressional committees with direct or indirect oversight responsibilities for banking, derivatives and equity markets have knowledge of NFA's successful history and our role in the regulatory environment for the financial markets.

The process of developing and sustaining productive business relationships is not a static one. NFA will continue to collaborate with a wide range of business partners to ensure that we achieve our strategic objectives.

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