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Registration Rules



RULE 401. QUALIFICATION TESTING REQUIREMENT.
[Adopted effective April 4, 1988. Effective dates of amendments: January 1, 1990; August 11, 1993; September 21, 1993; May 4, 1994; July 28, 1995; October 6, 1997; May 31, 2002; September 9, 2002; December 31, 2005; December 17, 2007; September 30, 2010; October 3, 2012; and February 21, 2013.]

(a) Except as provided elsewhere in this Rule, any individual applying to become a Member of NFA as an FCM, an RFED, an IB, a CPO, a CTA, an LTM, or for registration under the Act 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 granted NFA membership, registered under the Act as an AP, or registered as an Associate Member of NFA unless:

    (1) NFA has received satisfactory evidence that the applicant has taken and passed the National Commodity Futures Examination (Series 3) on a date which is no more than two years prior to the date the application is received by NFA; or

    (2) NFA has received satisfactory evidence that the applicant has taken and passed the National Commodity Futures Examination (Series 3) and since the date the applicant last passed such examination, there has been no period of two consecutive years during which the applicant has not been either registered as a FB, AP or principal of an FCM, RFED, IB, CTA, CPO or LTM.

(b) Notwithstanding the provisions of Rule 401(a), a person applying to be registered as an AP will satisfy the proficiency requirements of this Rule if:

    (1) the applicant currently is registered with the Financial Industry Regulatory Authority, as a General Securities Representative ("GSR") of the sponsor; and

    (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 of the sponsor 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 GSR of the sponsor; or the supervision on behalf of the sponsor of persons whose activities are so limited.

(c) Notwithstanding the provisions of Rule 401(a), a person applying to be registered as an AP will satisfy the proficiency requirements of this Rule if:

    (1) NFA receives satisfactory evidence the applicant has taken and passed the Futures Managed Funds Examination (Series 31) on a date which is no more than two years prior to the date the application is received by NFA; or

    (2) NFA has received satisfactory evidence that the applicant has taken and passed the Futures Managed Fund Examination (Series 31) and since the date the applicant last passed such examination, there has been no period of two consecutive years during which the applicant has not been either registered as an FB, AP or principal of an FCM, IB, CTA, CPO or LTM; and

    (3) the applicant currently is registered with the Financial Industry Regulatory Authority, as a GSR of the sponsor; and

    (4) the applicant's sole activities, subject to regulation by the Commission, are and will continue to be limited to the solicitation on behalf of the sponsor of funds, securities, or property for participation in a commodity pool, the solicitation on behalf of the sponsor of clients to open discretionary accounts to be managed by registered CTAs, or the supervision on behalf of the sponsor of persons whose activities are so limited.

(d) Notwithstanding the provisions of Rule 401(a), a person applying to be registered as an AP will satisfy the proficiency requirements of this Rule if:

    (1) NFA has received satisfactory evidence that the applicant has taken and passed the Financial Instruments Examination (Series 33) and since the date the applicant last passed such examination, there has been no period of two consecutive years during which the applicant has not been either registered as an AP or a principal of an FCM, IB, CTA, CPO or LTM; and

    (2) the applicant currently is registered with the Financial Industry Regulatory Authority, as a GSR of the sponsor; and

    (3) the applicant's sole activities, subject to regulation by the Commission, are and will continue to be limited to the solicitation or acceptance on behalf of the sponsor of customer orders for futures or options involving stock index, currency or interest rate products, or security futures products or the supervision on behalf of the sponsor of persons whose activities are so limited.

(e) Notwithstanding the provisions of Rule 401(a), a person applying to be registered as an AP will satisfy the proficiency requirements of this Rule if the applicant's sole activities, subject to regulation by the Commission, are and will continue to be limited to:

    (1) the solicitation or acceptance on behalf of the sponsor of orders for swaps subject to the jurisdiction of the CFTC;

    (2) solicitation on behalf of the sponsor of funds, securities, or property for participation in a commodity pool that:

      (i) exclusively trades swaps subject to the jurisdiction of the CFTC; or

      (ii) trades swaps subject to the jurisdiction of the CFTC in a commodity pool and the sponsor has been granted or is seeking a waiver from the Series 3 for its APs on the basis that but for the trading of swaps it would be eligible for the exclusion under CFTC Regulation 4.5(c)(2)(iii)(A) or (B) or the exemption under CFTC Regulation 4.13(a)(3).

    (3) the solicitation on behalf of the sponsor of clients to open discretionary accounts that exclusively trade swaps subject to the jurisdiction of the CFTC to be managed by registered CTAs or providing advice on behalf of the sponsor to a commodity pool described in subsection 2(i) or (ii) above; or

    (4) the supervision on behalf of the sponsor of persons whose activities are so limited.

(f) Notwithstanding the provisions of Rule 401(a), any individual applying to become a Member of NFA as an FCM, an RFED, an IB, a CPO, a CTA, an LTM, or for registration under the Act as an AP of any of the foregoing, or applying for registration with NFA as an Associate pursuant to NFA Bylaw 301(b), will satisfy the proficiency requirements of this Rule if:

    (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 (Series 3); and

    (3) NFA has received satisfactory evidence that the applicant has taken and passed the Limited Futures Examination-Regulation (Series 32) on a date which is no more than two years prior to the date the application is received by NFA; or

    (4) NFA has received satisfactory evidence that the applicant has taken and passed the Limited Futures Examination-Regulation (Series 32) and since the date the applicant last passed such examination, there has been no period of two consecutive years during which the applicant has not been either registered as an AP or a principal of an FCM, RFED, IB, CTA, CPO or LTM.

(g) The applicant's sponsor must supervise the applicant's compliance with the limitations on the applicant's activities set forth in paragraphs (b)-(d) of this Rule. 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 2-9. The limitations set forth in paragraphs (b)-(d) of 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 (Series 3).

(h) An individual may contemporaneously engage in any activity permitted pursuant to the provisions of paragraphs (b)(2), (c)(4) and (d)(3) provided that the individual meets the other pertinent requirements of paragraphs (b)-(d).

(i) Willfully making any materially false or misleading statement or willfully omitting to state any material fact in any part of the application for registration, including information concerning the requirements of this Rule, is cause for denial, suspension, or revocation of registration and criminal prosecution.

 
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