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Proposed Rule

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EXPLANATION OF PROPOSED AMENDMENTS

Public trading volume over the past six years has grown on average 31%. This sustained strong growth in public trading volume has allowed NFA to reduce the assessment fee seven times over the past nine years. These reductions have not caused NFA to sacrifice any of its regulatory resources. In fact, since the last reduction to the assessment fee in January 2005, NFA's Board of Directors has approved an approximate 30% increase in NFA's compliance department staff.

Since April 2007, public trading volume growth relative to the previous year has remained strong and for the six-month period of April 2007 thru September 2007 public trading volume has grown 25% relative to the same time period last year. Current projections show that if the assessment fee is reduced to one cent per side, effective January 2008, NFA is likely to sustain reserves within its targeted range for several years as long as public trading volume continues to grow in excess of 15% annually.

In setting assessment fees, NFA must balance competing interests-keeping the assessment fee as low as possible while avoiding the necessity of a fee increase in the near future. Barring a significant deceleration in public volume growth relative to the past six years, the Board believes that an assessment fee of one cent per side effective January 1, 2008 can be sustained for several years. As noted above, however, NFA will not sacrifice regulatory resources in the interest of lower fees.

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