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Proposed Rule

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REGISTRATION RULES

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PART 400. PROFICIENCY REQUIREMENTS

RULE 401. QUALIFICATION TESTING REQUIREMENT.

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(a) Except as provided elsewhere in this Rule, any individual applying to NFA for registration under the Act as an FCM, an IB, a CPO, a CTA, an LTM, or as an AP of any of the foregoing, or applying for registration with NFA as an Associate pursuant to NFA Bylaw 301(b) shall not be registered, temporarily licensed, or an Associate Member of NFA unless:

(1) NFA receives satisfactory evidence that the applicant has taken and passed the National Commodity Futures Examination on a date which is no more than two years prior to the date the application is received by NFA; or

(2) the applicant has been duly registered under the Act as an FCM, an IB, a CPO, a CTA, an LTM, or an AP of any of the foregoing, at any time during the two year period immediately preceding the date the application is received by NFA.

(b) Notwithstanding the provisions of Rule 401(a), a person applying to be registered as an AP may satisfy the proficiency requirements of this Rule by providing to NFA a certification, which shall be considered incorporated into the application for registration under the Act, signed by both the applicant and the applicant's sponsor, stating that:

(1) the applicant currently is registered with the National Association of Securities Dealers, Inc., as a General Securities Representative;

(2) the applicant's sole activities, subject to regulation by the Commission, are and will continue to be limited to referring clients to an AP who has satisfied the proficiency requirements set forth in this Rule, provided that the applicant's referral of clients is solely incidental to his business as a General Securities Representative; or the supervision of persons whose activities are so limited; and

(3) the applicant's sponsor understands that the sponsor must supervise the applicant's compliance with the limitation on the applicant's activities set forth above and that any failure of the applicant to adhere to such limitations may be cause for, among other things, disciplinary action by NFA against the sponsor for violation of NFA Compliance Rule 29; and

(4) the applicant and the applicant's sponsor understand that willfully making a materially false or misleading statement in any part of the application for registration, including the certification required by this Rule, is cause for denial, suspension, or revocation of registration and criminal prosecution.

The limitations set forth in this Rule shall remain in effect until the applicant or the applicant's sponsor submits to NFA satisfactory evidence of having taken and passed the National Commodity Futures Examination.

(c) Notwithstanding the provisions of Rule 401(a), a person applying to be registered as an AP may satisfy the proficiency requirements of this Rule by providing satisfactory evidence to NFA that the applicant has taken and passed the Futures Managed Funds Examination and providing to NFA a certification which shall be considered incorporated into the application for registration under the Act signed by both the applicant and the applicant's sponsor, stating that:

(1) the applicant currently is registered with the National Association of Securities Dealers, Inc., as a General Securities Representative;
(2) the applicant's sole activities, subject to regulation by the Commission, are and will continue to be limited to the solicitation of funds, securities, or property for participation in a commodity pool, the solicitation of clients to open discretionary accounts to be managed by registered CTAs, or the supervision of persons whose activities are so limited unless and until the applicant submits to NFA satisfactory evidence of having taken and passed the National Commodity Futures Examination;

(3) the applicant's sponsor understands that the sponsor must supervise the applicant's compliance with the limitations on the applicant's activities set forth above and that any failure of the applicant to adhere to such limitations may be cause for, among other things, disciplinary action by NFA against the sponsor for violation of NFA Compliance Rule 29; and

(4) the applicant and the applicant's sponsor understand that willfully making a materially false or misleading statement in any part of the application for registration, including the certification required by this Rule, is cause for denial, suspension, or revocation of registration and criminal prosecution.

The limitations set forth in this Rule shall remain in effect until the applicant or the applicant's sponsor submits to NFA satisfactory evidence of having taken and passed the National Commodity Futures Examination.

(d) Notwithstanding the provisions of Rule 401(a), a person applying to be registered as an AP may satisfy the proficiency requirements of this Rule by providing satisfactory evidence to NFA that the applicant has taken and passed the Financial Futures Examination and providing to NFA a certification which shall be considered incorporated into the application for registration under the Act signed by both the applicant and the applicant's sponsor, stating that:

(1) the applicant currently is registered with the National Association of Securities Dealers, Inc., as a General Securities Representative;

(2) the applicant's sole activities, subject to regulation by the Commission, are and will continue to be limited to the solicitation or acceptance of customer orders for futures or options involving stock index, currency or interest rate products, or the supervision of persons whose activities are so limited unless and until the applicant submits to NFA satisfactory evidence of having taken and passed the National Commodity Futures Examination;

(3) the applicant's sponsor understands that the sponsor must supervise the applicant's compliance with the limitations on the applicant's activities set forth above and that any failure of the applicant to adhere to such limitations may be cause for, among other things, disciplinary action by NFA against the sponsor for violation of NFA Compliance Rule 29; and

(4) the applicant and the applicant's sponsor understand that willfully making a materially false or misleading statement in any part of the application for registration, including the certification required by this Rule, is cause for denial, suspension, or revocation of registration and criminal prosecution.

The limitations set forth in this Rule shall remain in effect until the applicant or the applicant's sponsor submits to NFA satisfactory evidence of having taken and passed the National Commodity Futures Examination.

([d]e) Notwithstanding the provisions of Rule 401(a), a person applying to be registered as an FCM, an IB, a CPO, a CTA, an LTM, or as an AP of any of the foregoing, or applying for registration with NFA as an Associate pursuant to NFA Bylaw 301(b) may satisfy the proficiency requirements of this Rule by providing satisfactory evidence to NFA that:

(1) the applicant is or within the past two years has been registered or licensed in a jurisdiction outside the United States;

(2) the applicant has satisfied the proficiency requirements in that foreign jurisdiction and the Board of Directors has designated those proficiency requirements as an appropriate substitute for the market fundamentals portion of the National Commodity Futures Examination; and

(3) the applicant has taken and passed the regulatory portion of the National Commodity Futures Examination on a date which is no more than two years prior to the date the application is received by NFA.

The limitations set forth in this Rule shall remain in effect until the applicant or the applicant's sponsor submits to NFA satisfactory evidence of having taken and passed the National Commodity Futures Examination.

([d]e) Notwithstanding the provisions of Rule 401(a), a person applying to be registered as an FCM, an IB, a CPO, a CTA, an LTM, or as an AP of any of the foregoing, or applying for registration with NFA as an Associate pursuant to NFA Bylaw 301(b) may satisfy the proficiency requirements of this Rule by providing satisfactory evidence to NFA that: (1) the applicant is or within the past two years has been registered or licensed in a jurisdiction outside the United States;

(2) the applicant has satisfied the proficiency requirements in that foreign jurisdiction and the Board of Directors has designated those proficiency requirements as an appropriate substitute for the market fundamentals portion of the National Commodity Futures Examination; and

(3) the applicant has taken and passed the regulatory portion of the National Commodity Futures Examination on a date which is no more than two years prior to the date the application is received by NFA.

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