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NFA's Functions Explained



PRELIMINARY STATEMENT TO NFA'S MARCH 16, 1981 APPLICATION FOR REGISTRATION UNDER SECTION 17 OF THE COMMODITY EXCHANGE ACT

The National Futures Association (hereinafter "NFA") is the first applicant for registration under the Commodity Exchange Act (hereinafter "the Act") as a Registered Futures Association. Section 17 of the Act provides for the registration with the Commodity Futures Trading Commission (hereinafter "Commission") of one or more such associations.

Among the fundamental purposes of NFA is to relieve the Commission of a significant part of its current burden under the Act, especially in the direct regulation of futures commission merchants that have elected to operate without membership on contract markets where they do business. With the Commission's consent, the NFA could also relieve the agency of much of the clerical burden connected with the registration and testing of associated persons. In all likelihood, the efforts of NFA will allow the Commission to realize other savings in manpower and money as well.

The incorporators and organizers of NFA believe that the assumption by the private sector, through NFA, of a significant part of the Commission's existing burden is both prudent and desirable because it will enable the Commission to devote more of its scarce resources to duties under the Act which, if delayed or deferred, would have a serious adverse impact upon the continued growth of the commodity futures industry and would unnecessarily deprive the public (including businesses and institutions) of the expanding services of that industry.

In particular, the incorporators and organizers note already lengthy processing time at the Commission on such vital matters as approval of proposed new futures contracts; review of changes in contract market rules necessary to assure efficient exchange operations, to meet competition, and to better serve the public; inauguration of commodity options trading under exchange sponsorship; the resolution of customer claims under the reparations program; and other matters.

The incorporators and organizers of NFA believe that the Congress has mandated the regulation of commodity futures trading because it recognizes the important role played by these markets in the economic life of this nation. As such, we believe that Congress' desire to regulate in the public interest was never intended to impede the honest operation or the natural growth of futures markets. We view the creation of NFA as an opportunity for the Commission to carry out that Congressional intent, despite limited resources, and our decision to apply under Section 17 of the Act is motivated in substantial part by the expectation that duties of the Commission under the Act affecting industry growth and development can and will in the future be performed expeditiously.

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