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Articles of Incorporation



ARTICLE VII: BOARD OF DIRECTORS
[Effective dates of amendments: February 10, 1983; November 27, 1984; February 7, 1986; January 22, 1988; July 19, 1988; January 1, 1990; August 2, 1990; September 8, 1992; October 16, 1992; August 16, 1993; January 21, 1994; October 24, 1994; July 23, 1996; May 1, 1998; January 22, 2001; October 15, 2001; October 9, 2007; May 18, 2009; November 16, 2009; April 1, 2013; May 19, 2014; November 20, 2014 and October 8, 2015.]

Section 1: General.

The duties of the Board of Directors shall include the management of NFA's business, the adoption of NFA's Bylaws, and the fulfillment of NFA's fundamental purposes.

Section 2: Composition of the Board until the Annual Meeting of the Board of Directors Held in February 2016.

Until the regular annual meeting of the Board of Directors as set forth in Bylaw 506 (hereinafter "regular annual meeting of the Board" or "Board's regular annual meeting") held in February 2016, the Board of Directors shall be comprised as follows:

    (a) Contract Market Representatives.

      (i) In the event that there are four (4) or less Contract Market Members having annual transaction volume during the prior calendar year of more than 1,000,000, then one representative of each such Contract Market Member.

      (ii) In the event that there are more than four (4) Contract Market Members with annual transaction volume during the prior calendar year of more than 1,000,000:

        (a) One representative of each Contract Market Member ranked in the top three (3) Contract Market Members based on annual transaction volume during the prior calendar year.

        (b) One (1) elected representative of Contract Market Members with annual transaction volume during the prior calendar year of more than 1,000,000 that are not included in Section 2(a)(ii)(a) above. Only Contract Market Members not represented in accordance with Section 2(a)(ii)(a) shall be eligible to vote for the representatives elected in accordance with this Section 2(a)(ii)(b).

      (iii) A specific Contract Market's annual transaction volume shall be the number of commodity futures contracts and swaps contracts entered into on the Contract Market during the calendar year. The number of contracts entered into on a Contract Market shall be adjusted where necessary because of differences in sizes of contracts (e.g., one 5,000 oz. contract for a particular commodity would equal five 1,000 oz. contracts for that commodity for purposes of the computation).

      (iv) A Contract Market Member and all Contract Market Members with which it is affiliated shall have no more than one representative on the Board at any one time. For the purposes of this limitation, a Contract Market Member shall be deemed to be affiliated with another Contract Market Member if it directly or indirectly owns 100 percent of or is owned 100 percent by or has 100 percent ownership in common with such other Contract Market Member.

    (b) Futures Commission Merchant, Leverage Transaction Merchant and Introducing Broker Representatives.

      Nine (9) elected representatives of registered Futures Commission Merchant Members, registered Leverage Transaction Merchant Members and registered Introducing Broker Members, divided as follows:

        (i) Seven (7) representatives of FCMs, including (A) at least three (3) representatives of FCMs ranked in the top ten FCMs and (B) at least three (3) representatives of FCMs and LTMs not ranked in the top ten FCMs based on the total of futures customer segregated funds and foreign futures or foreign options secured amounts, as those terms are defined in the applicable Commission regulations, held as of June 30 of the prior calendar year.

        (ii) One representative of IBs required to maintain minimum adjusted net capital.

        (iii) One representative of IBs not required to maintain minimum adjusted net capital.

    (c) Commodity Pool Operator and Commodity Trading Advisor Representatives

      Five (5) elected representatives of registered Commodity Pool Operators and registered Commodity Trading Advisors that are NFA Members, including at least three (3) representatives of CPOs or CTAs that rank within the top 20 percent, one (1) of which must rank within the top 5 percent of CPOs or CTAs reporting any funds under management allocated to futures and swaps (as defined in Article XVIII) on NFA Form PQR and NFA Form PR as of June 30 of the prior calendar year.

    (d) Swap Dealer and Major Swap Participant Representatives and Retail Foreign Exchange Dealer Members.

      Seven (7) elected representatives of registered or provisionally registered Swap Dealers, registered or provisionally registered Major Swap Participants and registered Retail Foreign Exchange Dealers, divided as follows:

        (i) At least three (3) representatives of SDs that are Large Financial Institutions, as of June 30 of the prior calendar year.

        (ii) At least three (3) representatives of SDs or RFEDs that are not included in paragraph (d)(i) above, as of June 30 of the prior calendar year.

        (iii) One representative of MSPs: Provided, however, that if there are no persons willing and eligible to be a representative of MSPs, then one (1) representative of SDs and RFEDs.

    (e) Public Representatives.

      (a) Effective as of the 2013 annual meeting of the Board, eleven (11) individuals who are Public Representatives (see Article XVIII); and

      (b) Effective as of the 2016 annual meeting of the Board, individuals who are Public Representatives (see Article XVIII) shall constitute thirty-five percent (35%) of the Board's voting representatives.

    (f) An FCM, LTM, RFED, IB, CTA, CPO, SD or MSP Member and all of its Affiliates (See Article XVIII(b)) shall have no more than one representative on the Board at any one time.

Section 2A: Composition of Board from and after the Annual Meeting of the Board of Directors Held in February 2016.

Notwithstanding anything to the contrary contained herein, the terms of office of all Directors in office shall expire at the regular annual meeting of the Board held in February 2016. From and after the regular annual meeting of the Board held in February 2016, the Board of Directors shall be comprised as follows:

    (a) Contract Market Representatives.

      (i) In the event that there are three (3) or less Contract Market Members having annual transaction volume during the prior calendar year of more than 1,000,000, then one (1) representative of each such Contract Market Member.

      (ii) In the event that there are more than three (3) Contract Market Members with annual transaction volume during the prior calendar year of more than 1,000,000:

        (a) One (1) representative of each Contract Market Member ranked in the top two (2) Contract Market Members based on annual transaction volume during the prior calendar year; and

        (b) One (1) elected representative of Contract Market Members with annual transaction volume during the prior calendar year of more than 1,000,000 that are not included in Section 2A(a)(ii)(a) above. Only Contract Market Members not represented in accordance with Section 2A(a)(ii)(a) shall be eligible to vote for the representatives elected in accordance with this Section 2A(a)(ii)(b).

      (iii) A specific Contract Market's annual transaction volume shall be the number of commodity futures contracts and swaps contracts entered into on the Contract Market during the calendar year. The number of contracts entered into on a Contract Market shall be adjusted where necessary because of differences in sizes of contracts (e.g., one 5,000 oz. contract for a particular commodity would equal five 1,000 oz. contracts for that commodity for purposes of the computation).

      (iv) A Contract Market Member and all Contract Market Members with which it is affiliated shall have no more than one (1) representative on the Board at any one time. For the purposes of this limitation, a Contract Market Member shall be deemed to be affiliated with another Contract Market Member if it directly or indirectly owns 100 percent of or is owned 100 percent by or has 100 percent ownership in common with such other Contract Market Member.

    (b) Futures Commission Merchant, Leverage Transaction Merchant and Introducing Broker Representatives.

      Seven (7) elected representatives of registered Futures Commission Merchant Members, registered Leverage Transaction Merchant Members and registered Introducing Broker Members, divided as follows:

        (i) Five (5) representatives of FCMs, including (A) at least two (2) representatives of FCMs ranked in the top ten FCMs and (B) at least two (2) representatives of FCMs and LTMs not ranked in the top ten FCMs based on the total of futures customer segregated funds and foreign futures or foreign options secured amounts, as those terms are defined in the applicable Commission regulations, held as of June 30 of the prior calendar year.

        (ii) One (1) representative of IBs required to maintain minimum adjusted net capital.

        (iii) One (1) representative of IBs not required to maintain minimum adjusted net capital.

    (c) Commodity Pool Operator and Commodity Trading Advisor Representatives

      Four (4) elected representatives of registered Commodity Pool Operators and registered Commodity Trading Advisors that are NFA Members, including (i) at least one (1) representative of CPOs or CTAs ranked within the top five (5) percent and (ii) at least one (1) representative of CPOs or CTAs ranked within the top ten (10) percent of CPOs or CTAs reporting any funds under management allocated to futures and swaps (as defined in Article XVIII) on NFA Form PQR and NFA Form PR as of June 30 of the prior calendar year.

    (d) Swap Dealer and Major Swap Participant Representatives and Retail Foreign Exchange Dealer Members.

      Five (5) elected representatives of registered or provisionally registered Swap Dealers, registered or provisionally registered Major Swap Participants and registered Retail Foreign Exchange Dealers, divided as follows:

        (i) At least two (2) representatives of SDs that are Large Financial Institutions, as of June 30 of the prior calendar year; and

        (ii) At least two (2) representatives of SDs, MSPs or RFEDs that are not included in paragraph (d)(i) above, as of June 30 of the prior calendar year.

    (e) Public Representatives.

      Ten (10) individuals who are Public Representatives (see Article XVIII).

    (f) An FCM, LTM, RFED, IB, CTA, CPO, SD or MSP Member and all of its Affiliates (See Article XVIII) shall have no more than one (1) representative on the Board at any one time.

Section 3: Nominations; Election.

The elected Directors shall be chosen as follows:

    (a) Nominating Committee.

    The Nominating Committee (see Article X) shall nominate at least one candidate for each elected FCM and LTM; IB; CPO and CTA; and SD, MSP and RFED Director position to be filled. These nominations shall be made in accordance with the eligibility requirements contained in this Article. The Nominating Committee shall nominate candidates whose election shall result in diverse segments of each category being represented on the Board based upon the size of the Member, the type of business conducted by the Member and the type of customer serviced by the Member.

    (b) Petition Procedure.

    Nominations may be made for elected FCM and LTM; IB; CPO and CTA; and SD, MSP and RFED Director positions by:

      (i) Petition signed by 50 or more NFA Members in the category for which the nomination is made (i.e., FCM and LTM; SD, MSP and RFED; IB; and CPO and CTA); or

      (ii) Petition submitted by any organization or association recognized by NFA as fairly representing the category (See (b)(i) above) for which the nomination is made.

    Petitions shall be submitted in the manner specified in the Bylaws. No petition may nominate more than one candidate for the same position.

    (c) Election.

    If there is a contested election in any category (See (b)(i) above) of NFA Members, the Members in that category shall thereafter elect by plurality vote from such nominees the Directors that are to represent that category. The election shall be conducted in the manner provided in the Bylaws, which shall provide for an Annual Election. If there is not a contested election in any category of NFA Members, the Directors that are to represent that category shall be elected to the Board by the members of the Executive Committee, other than the members who are Public Representatives (and solely for such purposes shall be deemed the sole voting members under the General Corporation Law of the State of Delaware).

    (d) Public Representatives.

    The Public Representatives shall be chosen as follows: Before the Annual Election, the Board shall solicit the nomination of individuals to serve on the Board in the Public Representative category. At the Board's regular annual meeting, the Board shall, by majority vote, elect the Public Representatives to serve on the Board.

    (e) Contract Markets

    At the Annual Election held in 2016 and at all Annual Elections held thereafter, in the event of an election as described in Article VII, Section 2A(a)(ii)(b), the Contract Market representatives shall be elected as follows: Before the Annual Election, the Board shall solicit from Contract Market Members eligible to have representatives pursuant to Article VII, Section 2A(a)(ii)(b) the nomination of individuals to serve on the Board as representatives of such Contract Market Members. If there is a contested election of such Contract Market Members, the Contract Market Members eligible to vote pursuant to Article VII, Section 2A(a)(ii)(b) shall thereafter elect by plurality vote from such nominees the Directors that will represent them. The election shall be conducted in the manner provided in the Bylaws, which shall provide for an Annual Election. If there is not a contested election of such Contract Market Members, the Directors that are to represent that category shall be elected to the Board by the members of the Executive Committee, other than the members who are Public Representatives (and solely for such purposes shall be deemed the sole voting members under the General Corporation Law of the State of Delaware).

Section 4: Terms of Directors.

    (a) Contract Market Directors.

    Notwithstanding anything to the contrary contained herein, the terms of office of all Directors in office shall expire at the regular annual meeting of the Board held in February 2016. From and after the regular annual meeting of the Board held in February 2016, Directors representing Contract Market Members shall serve for one-year terms, from the date of the Board’s regular annual meeting until the date of the Board’s regular annual meeting one year hence.

    (b) Other Directors.

    Notwithstanding anything to the contrary contained herein, the terms of office of all Directors in office shall expire at the regular annual meeting of the Board held in February 2016. The Nominating Committee shall determine which Directors, other than Contract Market Directors and Public Representatives, whose terms begin on the date of the regular annual meeting of the Board held in February 2016 shall serve two-year terms as follows: three (3) representatives of FCMs and LTMs, at least one (1) of which is described in Section 2A(b)(i)(A) and at least one (1) of which is described in Section 2A(b)(i)(B); one (1) representative of IBs; two (2) representatives of CPOs or CTAs, at least one (1) of which is described in Sections 2A(c)(i) and 2A(c)(ii); and three (3) representatives of SDs, MSPs and RFEDs, at least one (1) of which is described in Section 2A(d)(i) and at least one (1) of which is described in Section 2A(d)(ii). The remainder of such Directors shall serve one-year terms. The Board shall determine which five (5) of the Public Representatives whose terms begin on the date of the regular annual meeting of the Board held in February 2016 shall serve two-year terms. The remainder of the Public Representatives shall serve-one-year terms. Except as provided above, Directors other than Contract Market Member Directors shall serve for two-year terms, from the date of the Board's regular annual meeting following the Annual Election at which they are elected until the date of the Board's regular annual meeting two years hence.

Section 5: Voting; Quorum.

Each Director shall have one vote upon any matter coming before the Board for official action, and, except as otherwise provided in these Articles or NFA's Bylaws, the affirmative vote of a majority of the Directors present and voting at a meeting of the Board shall be NFA's official act if a quorum is present. A quorum of the Board shall consist of one-half of the Directors, except where NFA Bylaws specify a lesser number in emergency situations.

Section 6: Establishment of Major Plans and Priorities.

The Board shall establish for observance by the Executive Committee (See Article VIII) and NFA staff major plans and priorities, including those regarding the commitment and expenditure of NFA funds.

Section 7: Chairman and Vice Chairman.

There shall be a Chairman and Vice Chairman of the Board. They shall serve for one-year terms and shall be elected by the Board at its regular annual meeting, by majority vote. The Chairman shall be elected from among the Directors in office and the Vice Chairman shall be elected from among Directors elected to serve on the Executive Committee.

Section 8: Vacancies.

A vacancy that occurs on the Board before the expiration of a Director's term or because additional Directors in existing or new Member categories are required shall be filled (for the unexpired term) by an eligible individual elected by majority vote of the remaining Directors who represent the category of Members in which the vacancy occurred, except that if the vacancy involves a representative of a Contract Market Member, that Contract Market Member shall designate the successor. In the event there are no Directors remaining who represent the category of Members in which the vacancy occurred, the vacancy shall be filled by an eligible individual elected by the Board.

      Section 9: Removal.

      In accordance with Section 141(j) of the General Corporation Law of the State of Delaware, notwithstanding anything to the contrary set forth in the other provisions of the General Corporation Law of the State of Delaware, including the other provisions of Section 141, Directors may be removed from office as follows:

        (a) Any Director representing a Contract Market Member described in Article VII and any FCM and LTM; SD and MSP; IB; or CPO and CTA Director may be removed by a majority of the Members eligible to elect the Director whenever, in their judgment, the best interests of NFA will be served thereby; or

        (b) Upon recommendation of the Executive Committee, any Director may be removed by two-thirds of the Directors present and voting at a duly convened meeting of the Board whenever, in their judgment, the best interests of NFA will be served thereby.

      Section 10: Director Qualifications.

      In addition to any other Director qualification set forth herein or in the Bylaws or any other policy of the Board or NFA, no Director who has been removed from office in accordance with Section 9 of Article VII hereof shall be qualified to be a Director at any time following such removal.

       
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