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NFA's Board of Directors votes to decrease its size by 45 percent
Citing the need to operate more efficiently in a rapidly changing business environment, NFA's Board of Directors approved changes to the Articles and Bylaws that will reduce the size of the Board from 45 to 25 representatives. The action was taken at NFA's Board meeting on August 16 in Chicago, and the transition to the new Board will be completed by February 2002.
"Gaining acceptance of NFA in the futures community was a critical factor when we began in 1982, and a large Board representation was a primary means of attaining that acceptance," says NFA Senior Executive Vice President Dan Roth. "However, NFA now faces the challenge of responding to the momentous changes occurring in the futures and financial services industries, and we require a Board whose size supports quick and efficient decision making."
The proposal for a smaller Board originated with a Special Committee on NFA Governance that was created in February. The Committee, chaired by Permanent Special Advisor to the Board Leo Melamed, formulated its recommendations after a thorough review of the many issues involved in modernizing NFA's governance structure.
"The Committee's recommendations provide for a Board whose size, composition and voting rules will enable it to operate efficiently while maintaining the unique character and style that NFA's Board has developed in the last two decades," says Melamed.
NFA's new Board of Directors will consist of the following representation: Four exchange directors will represent the top four exchanges based on volume; the other two will be elected by the remaining exchanges that are not affiliated with any of the top four. Similarly, four FCM representatives will come from the top ten FCMs based on the amount of customer funds they hold, and four others will represent all other FCMs. One IB director will be an independent IB and the second, a guaranteed IB. In the CPO/CTA category, two of the four directors will be affiliated with either CPOs or CTAs that are ranked in the top 20 percent of funds under management allocated to futures. There will also be five public directors, satisfying the CFTC requirement that 20 percent of the Board must be public representatives.
In addition, the Board approved two changes concerning voting and committees. A supermajority voting rule (two-thirds of the directors present and voting) will replace the category voting rules for those matters that now require a category vote. Also, NFA's Appeals Committee will now have five members instead of nine, all of whom are directors; and the Membership Committee will continue to consist of nine members, five of whom must be directors.
The transition process requires the creation of an Interim Board that will consist of the existing directors. The Interim Board will have all the powers of the Board except the power to adopt, amend or repeal the Articles of Incorporation. NFA will hold elections for the new Board in January 2002, and the Board's first meeting will be held on February 21.