Search NFA Rulebook
Search This Rule
Articles of Incorporation
ARTICLE I: NAME
The name of the Corporation shall be National Futures Association (hereinafter "NFA").
ARTICLE II: LOCATION
NFA's principal office shall be in Chicago, Illinois. NFA shall maintain a regional office in New York, New York and at such other locations as the Board of Directors (hereinafter "Board") may designate.
ARTICLE III: PURPOSES
[Effective dates of amendments: April 14, 1983; January 1, 1990; April 23, 2001; April 1, 2013; and October 8, 2015.]
Section 1: Fundamental Purposes.
Subject to the limitations in Section 2 of this Article, the fundamental purposes of NFA are to promote the improvement of business conditions and the common business interests of persons engaged in commodity futures and swaps or related activity by
(i) undertaking the regulation of persons that are members of NFA (hereinafter "Members") as set forth in this Article;
(ii) relieving the Commission from the substantial burden of direct regulation in such matters; and
(iii) providing such regulatory services to such markets as the Board may from time to time approve. Actions of NFA to effectuate these purposes may include:
(a) Public Interest.
The adoption, administration and enforcement as to the following persons of requirements regarding fair practice and designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade and, in general, to protect the public interest
(i) Members that are registered with the Commission as Futures Commission Merchants, Commodity Pool Operators, Commodity Trading Advisors, Introducing Brokers, Leverage Transaction Merchants, Retail Foreign Exchange Dealers, Swap Dealers or Major Swap Participants; and
(ii) Associates (See Article XVIII).
(b) Financial Standards.
Notwithstanding the provisions of Section 2(a) of this Article, the adoption with respect to its Members that are Futures Commission Merchants, Introducing Brokers, Leverage Transaction Merchants, Retail Foreign Exchange Dealers, Swap Dealers or Major Swap Participants of financial and related requirements designed to protect against insolvency, bankruptcy, or unsafe or unsound financial condition of such Members; the conduct, directly or through agents, of audits and reviews of the financial condition and related matters of such Members; and the adjudication and enforcement of compliance with NFA's financial and related requirements for all such Members, except as may otherwise be provided under Commission Regulations: Provided, however, it is expressly understood that Contract Markets and Clearing Organizations shall have the right to adopt, administer and enforce financial and related requirements governing the eligibility of Members for membership privileges on such Contract Markets or Clearing Organizations.
(c) Arbitration.
The adoption and administration of a fair and equitable procedure through arbitration or otherwise for the voluntary settlement of customers' claims or grievances against Members described in paragraph (a) above, their employees, and Associates, in accordance with Section 17(b)(10) of the Act, or claims or grievances of such Members or Associates against customers, or claims or grievances between or among such Members or Associates: Provided, however, no such procedure shall apply to the settlement of a claim or grievance where the parties, by valid and binding agreement, have committed themselves to the resolution of such claim or grievance in a forum other than NFA, or where parties having claims or grievances between or among themselves are required by Contract Market rules to submit the controversy to the settlement procedures of such Contract Market.
(d) Qualifications Standards.
The adoption of appropriate standards with respect to such training, experience and other qualification requirements as NFA deems necessary and appropriate to insure the fitness of Members and Associates; the development and administration of written proficiency examinations of Members and Associates; and, with the approval of the Commission, the administration of the registration of Members, Associates and any other persons required to be registered with the Commission. Such requirements, examinations and registrations adopted by NFA with respect to Associates shall, with the consent of each Contract Market Member conducting comparable activities, replace and supplant the requirements, examinations and related activities theretofore conducted with respect to Associates by the Contract Market Member.
(e) Protection of Customers.
Notwithstanding the provisions of Section 2(a) of this Article, the adoption, administration and enforcement of uniform, industry-wide requirements regarding the dealings and relations between and among Members described in paragraph (a) above, Associates and the customers of such Members and Associates, including, without limitation, requirements governing the manner, method, and place of soliciting business, including the content of such solicitations and the form and manner of handling, recording, and accounting for customers' orders, transactions, and accounts.
(f) Doing Business With Non-Members.
The prohibition of Members from carrying accounts, accepting orders, or handling transactions, in commodity futures contracts, for or on behalf of any non-Member, or suspended Member, that is required to be registered with the Commission as a Futures Commission Merchant, Commodity Pool Operator, Commodity Trading Advisor, Introducing Broker or Leverage Transaction Merchant and that is acting in respect to the account, order, or transaction for a customer, a commodity pool or participant therein, a client of a commodity trading advisor, or any other person, unless
(i) such non-Member is a member of another futures association registered under Section 17 of the Act or is exempted from this prohibition by the Board or
(ii) such suspended Member is exempted from this prohibition by the Board or a committee thereof.
The prohibition of Members from accepting orders in commodity futures contracts to cover leverage transactions, for or on behalf of any non-Member, or suspended Member that is required to be registered with the Commission as a Leverage Transaction Merchant, unless
(i) such non-Member is a member of another futures association registered under Section 17 of the Act or is exempted from this prohibition by the Board or
(ii) such suspended Member is exempted from this prohibition by the Board or a committee thereof.
(g) Corporate Powers.
The purchase or other acquisition, and the holding, owning, maintaining, working, developing, selling, leasing, exchanging, hiring, conveying, mortgaging or otherwise disposing of and dealing in, lands and leaseholds, and any interest, estate and rights in personal property, and any personal or mixed property, and any franchises, rights, licenses or privileges necessary, convenient or appropriate for any of the purposes herein expressed; the borrowing of funds for NFA's purposes and the pledging of real, personal or mixed property in connection therewith; the institution and defense of suits in NFA's name, and the settlement or compromising of any claim or controversy by or against it; and, subject to the delineation of purposes recited herein and the limitations set forth in Section 2 of this Article, the carrying out of all and everything necessary, suitable or proper for the accomplishment of any of the purposes, or the attainment of any of the objects, or the furtherance of any of the powers hereinabove set forth, and the performance of every other act or acts incident or appurtenant to, or growing out of, or connected with the aforesaid business or powers, or any part or parts thereof, and the exercise of all or any of its corporate powers or rights in the State of Delaware and in the various other states, territories, and dependencies of the United States, in the District of Columbia and in all or any foreign countries.
Section 2: Contract Market
(a) Non-applicability of NFA Rules.
No NFA requirement shall purport to govern or otherwise regulate the specific conduct of a Member or Associate if such conduct is governed or regulated by the requirements of a Contract Market and such Member or Associate is subject to the Contract Market's disciplinary jurisdiction for such conduct.
(b) Prohibition Upon Adoption of Certain Rules.
NFA shall not adopt, administer or enforce upon any Member or Associate a rule, standard, requirement or procedure which purports to govern or otherwise regulate any of the following:
(i) The minimum level of margin required for any futures or swaps contract or type of futures or swaps transaction, the method for calculation thereof, or compliance therewith, unless such rule, standard, requirement or procedure conforms and is not inconsistent with applicable Contract Market requirements.
(ii) Eligibility for membership in, clearing privileges on, or service on the governing board or committees of, a Contract Market.
(iii) The rights, privileges, duties or responsibilities of membership in any Contract Market or Clearing Organization.
(iv) The content, interpretation, administration or enforcement of any rule, standard, requirement or procedure of a Contract Market or Clearing Organization.
(v) The conduct of business or other activities on the trading floor of a Contract Market.
(vi) The terms or conditions of any futures contract.
(vii) The terms or conditions of any swaps contract; provided that such terms or conditions conform to and are not inconsistent with applicable Contract Market requirements.
Section 3: Communications With Legislative Bodies.
NFA shall not communicate any statement as its official position, view or opinion to a legislative body on any matter pending or contemplated to be pending before such body, except with the prior approval of the Board.
ARTICLE IV: FORM OF ORGANIZATION
[Effective dates of amendments: October 15, 2001.]
NFA shall be a membership corporation and shall have no capital stock and shall have no authority to issue any stock. NFA is not organized and shall not be conducted for profit, and no part of its net revenues or earnings shall inure to the benefit of any Member except for the repayment of bona fide loans or other credit extended by a Member to NFA.
ARTICLE V: [RESERVED]
ARTICLE VI: MEMBERS
[Effective dates of amendments: February 10, 1983; April 14, 1983; February 7, 1986; January 1, 1990; August 16, 1993; and April 1, 2013.]
Section 1: Membership Eligibility.
Persons eligible to become NFA Members shall include:
- (a) any person registered or provisionally registered with the Commission;
(b) any Contract Market; and
(c) any person designated by Commission Rule as eligible for NFA membership.
Section 2: Membership Category.
Each Member which qualifies for membership status in one or more of the following categories
| (a) FCMs; (b) CPOs; (c) CTAs; (d) IBs; (e) LTMs; |
(f) RFEDs; (g) SDs; or (h) MSPs |
shall be deemed to be a Member for the purposes of Articles VII, VIII and X only in that single category to which its business activities primarily relate. Each Member shall have one vote on all matters on which the Member's category is entitled to vote.
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; October 8, 2015; and February 15, 2024.]
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 Board from and after the Annual Meeting of the Board of Directors Held in February 2024.
Notwithstanding anything to the contrary contained herein, at 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 2024 the terms of office of all Directors in office shall expire. From and after the regular annual meeting of the Board held in February 2024, the Board of Directors shall be comprised of no more than 23 Directors, the exact number and allocation in each Board category to be fixed by the Board of Directors from time to time pursuant to resolution adopted by the Board of Directors and shall include the following:
(a) Contract Market Representatives.
No more than two (2) Contract Market Representatives as follows:
In the event that there is only one (1) Contract Market Member of NFA having annual transaction volume during the prior calendar year of more than 1,000,000, then one (1) representative of that Contract Market Member.
In the event there are at least two (2) Contract Market Members having annual transaction volume during the prior calendar year of more than 1,000,000:
(a) one (1) representative of the Contract Market Member with the greatest annual transaction volume during the prior calendar year; and
(b) one (1) representative from a Contract Market Member not included in Section 2(a)(ii)(a) above. Only Contract Market Members not represented in accordance with Section 2(a)(ii)(a) above shall be eligible to vote for the representative elected in accordance with this Section 2(a)(ii)(b).
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).
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 and Leverage Transaction Merchant Representatives.
No more than four (4) and no fewer than three (3) elected representatives of registered Futures Commission Merchants (FCMs) and registered Leverage Transaction Merchants (LTMs), divided as follows:
(i) If there are four (4) representatives, then two (2) representatives of FCMs ranked in the top ten FCMs and two (2) representatives of FCMs and LTMs not ranked in the top ten FCMs based on the total of futures customer segregated funds, cleared swaps customer collateral 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; or
(ii) If there are three (3) representatives, then two (2) representatives of FCMs ranked in the top ten FCMs and one (1) representative of FCMs and LTMs not ranked in the top ten FCMs based on the total of futures customer segregated funds, cleared swaps customer collateral 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.
(c) Introducing Broker Representatives.
One (1) representative of registered Introducing Brokers.
(d) Commodity Pool Operator and Commodity Trading Advisor Representatives.
Three (3) elected representatives of registered Commodity Pool Operators (CPOs) and registered Commodity Trading Advisors (CTAs) that are NFA Members reporting 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 the prior calendar year (Funds Under Management Allocated to Futures and Swaps) divided as follows: one (1) representative from CPOs or CTAs ranked within the top ten (10) percent based on Funds Under Management Allocated to Futures and Swaps; one (1) representative from CPOs or CTAs ranked within the top twenty (20) percent based on Funds Under Management Allocated to Futures and Swaps; and one at large representative from CPOs or CTAs with no restriction on its rank among CPOs and CTAs reporting Funds Under Management Allocated to Futures and Swaps.
(e) Swap Dealer and Major Swap Participant Representatives and Retail Foreign Exchange Dealer Members.
No more than four (4) and no fewer than three (3) elected representatives of registered or provisionally registered Swap Dealers (SDs), registered or provisionally registered Major Swap Participants (MSPs) and registered Retail Foreign Exchange Dealers (RFEDs), divided as follows:
(i) If there are four (4) representatives, then two (2) representatives of SDs that are Large Financial Institutions, as of June 30 of the prior calendar year and two (2) representatives of SDs, MSPs or RFEDs that are not Large Financial Institutions, as of June 30 of the prior calendar year; or
(ii) If there are three (3) representatives, then two (2) must be representatives of SDs that are Large Financial Institutions, as of June 30 of the prior calendar year and one (1) representative must be of SDs, MSPs or RFEDs that are not Large Financial Institutions, as of June 30 of the prior calendar year.
(f) Public Representatives.
No more than nine (9) individuals who are Public Representatives (see Article XVIII).
(g) 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.
(a) Member Category Representatives.
Member Category Directors, other than Contract Markets, shall be nominated in accordance with the process established by the Nominating and Governance Committee (see Bylaw 706). If there is a contested election in an NFA Member category, the Members in that category shall thereafter elect by plurality vote from such nominees the Directors that are to represent that category (See Bylaw 406). 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 a category of NFA Member, the Directors who represent that category and who are to be elected shall be elected to the Board by the Board of Directors (and solely for such purposes shall be deemed the sole voting members under the General Corporation Law of the State of Delaware).
(b) Public Representatives.
The Public Representatives shall be nominated by the Nominating and Governance Committee for election by the Board of Directors in accordance with the process established by the Nominating and Governance Committee. Before the Annual Election, the Board shall solicit the names of individuals for consideration 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.
(c) Contract Market Representatives.
In the event of an election as described in Article VII, Section 2(a)(ii)(b), Contract Market representatives shall be elected as follows: Before the Annual Election, the Board shall solicit from Contract Market Members eligible to have a representative pursuant to Article VII, Section 2(a)(ii)(b) the nomination of individuals to serve on the Board as a representative 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 2(a)(ii)(b) shall thereafter elect by plurality vote from such nominees the Director that will represent them. The election shall be conducted in the manner provided in the Bylaws, which shall provide for an Annual Election. Tie votes may be resolved by the Board by random lot. If there is not a contested election of such Contract Market Members, the Director that represents Contract Markets described in Article VII, Section 2(a)(ii)(b) shall be elected to the Board by the Board of Directors (and solely for such purposes shall be deemed the sole voting members under the General Corporation Law of the State of Delaware). The Director that represents the Contract Market described in Article VII, Section 2(a)(ii)(a) shall be elected to the Board by the Board of Directors (and solely for such purposes shall be deemed the sole voting members under the General Corporation Law of the State of Delaware).The Director that represents the Contract Market described in Article VII, Section 2(a)(ii)(a) shall be elected to the Board by the Board of Directors (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.
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 2024. The Board of Directors, pursuant to a resolution adopted by the Board, shall determine which Directors whose terms begin on the date of the regular annual meeting of the Board held in February 2024 shall serve one-year or two-year terms. Except as provided above, 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 major plans and priorities, including those regarding the commitment and expenditure of NFA funds.
Section 7: Chair.
There shall be a Chair of the Board. The Chair shall serve for a one-year term and shall be elected by the Board at its regular annual meeting, by majority vote. The Chair shall be elected from among the Directors in office. No Director is eligible to serve as Chair without completing one (1) full two (2)-year term as a Director.
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 FCM, LTM, SD, MSP, and RFED; IB; or CPO and CTA 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 Nominating and Governance 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.
ARTICLE VIII: EXECUTIVE COMMITTEE
[Effective dates of amendments: November 27, 1984; February 7, 1986; January 22, 1988; January 1, 1990; August 16, 1993; May 1, 1998; January 22, 2001; October 15, 2001; May 18, 2009; November 16, 2009; April 1, 2013; May 19, 2014; October 8, 2015 and February 15,2024.]
Section 1: General.
There shall be an Executive Committee of the Board, which may exercise all powers of the Board except as set forth in Section 2 below. The authorized actions of the Executive Committee shall be deemed actions of the Board.
Section 2: Board Powers Not Exercisable By Executive Committee.
(a) General Prohibitions.
The Executive Committee shall not exercise any power of the Board when the Board is in session, and the Executive Committee shall at no time take any action with respect to any matter that is the subject of a notice of a pending Board meeting without the concurrence of the Board.
(b) Specific Prohibitions.
The Executive Committee shall at no time exercise any of the following powers of the Board:
(i) The adoption, amendment or repeal of any Bylaw unless such power has been delegated by the Board in accordance with Article XI, Section 1; or the ratification of any proposal to adopt, amend or repeal these Articles.
(ii) The establishment of major plans and priorities, including those regarding the commitment and expenditure of NFA funds, except that the Board may authorize the Executive Committee to make expenditures within specific monetary limits prescribed in the Bylaws or Board Resolutions.
(iii) Except as provided in Article VII, Section 3(c) and Section 3(e), the election, appointment or removal of any NFA Director, officer or committee member.
(iv) The adoption of a plan of merger or consolidation with another entity.
(v) The sale, lease, exchange or mortgage of all or substantially all of NFA property or assets.
(vi) The voluntary dissolution of NFA or the revocation of proceedings therefor.
(vii) The adoption of a plan for the distribution of NFA assets.
(viii) The amendment or repeal of any Board Resolution that, by its terms, provides that it shall not be amended or repealed by the Executive Committee.
Section 3: Composition.
The Executive Committee shall comprise the following:
(a) NFA's President, who shall be an ex officio, non-voting member; and
(b) The Chairman of the Board, who shall be a non-voting member except in the case of tie votes; and
(c) Thirteen (13) Directors, as follows:
(i) Two (2) Directors representing Contract Markets:
(A) One (1) representative of a Contract Market that had transaction volume of more than 20 percent of aggregate contract market transaction volume during the prior calendar year. A specific Contract Market's transaction volume shall be the number of commodity futures contracts and swaps contracts entered into on the Contract Market. The aggregate contract market transaction volume shall be the number of such contracts entered into on all U.S. contract markets. 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); and
(B) One (1) representative of a Contract Market other than a Contract Market described in clause (A) above: Provided, however, if no Contract Market described in clause (A) above is represented on the Board, there shall be two Directors on the Committee from Contract Markets represented on the Board;
(ii) Two (2) Directors representing FCMs, LTMs or IBs;
(iii) Two (2) Directors representing CPOs and CTAs;
(iv) Two (2) Directors representing SDs, MSPs or RFEDs; and
(v) Five (5) Directors who are Public Representatives (see Article XVIII(s)).
Section 4: Election of Members; Vacancies.
The elected members of the Executive Committee shall be chosen by the Board at the regular annual meeting as follows: The Directors representing Contract Markets that had transaction volume of more than 20 percent of aggregate Contract Market transaction volume during the prior calendar year shall elect the Committee member in category (c)(i)(A) above; the Directors representing all other Contract Markets shall elect the Committee member in category (c)(i)(B) above; the Directors representing FCMs, LTMs and IBs shall elect the Committee members in category (c)(ii) above; the Directors representing CPOs and CTAs shall elect the Committee members in category (c)(iii) above; the Directors representing SDs, MSPs and RFEDs shall elect the Committee members in category (c)(iv) above; and the Public Representative Directors shall elect the Committee members in category (c)(v) above. A vacancy that occurs on the Executive Committee before the expiration of a Committee Member's term or because additional Committee Members in existing or new Member categories are required shall be filled in like manner. Tie votes may be resolved by the Board by random draw.
Section 5: Voting; Quorum.
Each member of the Executive Committee shall have one vote on Executive Committee matters. A majority of the Executive Committee members shall constitute a quorum.
Effective February 15, 2024 the above rule will read as follows:
ARTICLE VIII: EXECUTIVE COMMITTEE
[Effective dates of amendments: November 27, 1984; February 7, 1986; January 22, 1988; January 1, 1990; August 16, 1993; May 1, 1998; January 22, 2001; October 15, 2001; May 18, 2009; November 16, 2009; April 1, 2013; May 19, 2014; October 8, 2015; and February 15, 2024.]
Section 1: General.
There shall be an Executive Committee of the Board, which may exercise all powers of the Board except as set forth in Section 2 below. The authorized actions of the Executive Committee shall be deemed actions of the Board.
Section 2: Board Powers Not Exercisable By Executive Committee.
(a) General Prohibitions.
The Executive Committee shall not exercise any power of the Board when the Board is in session, and the Executive Committee shall at no time take any action with respect to any matter that is the subject of a notice of a pending Board meeting without the concurrence of the Board.
(b) Specific Prohibitions.
The Executive Committee shall at no time exercise any of the following powers of the Board:
(i) The adoption, amendment or repeal of any Bylaw unless such power has been delegated by the Board in accordance with Article XI, Section 1; or the ratification of any proposal to adopt, amend or repeal these Articles.
(ii) The establishment of major plans and priorities, including those regarding the commitment and expenditure of NFA funds, except that the Board may authorize the Executive Committee to make expenditures within specific monetary limits prescribed in the Bylaws or Board Resolutions.
(iii) The election, appointment or removal of any NFA Director, officer or committee member.
(iv) The adoption of a plan of merger or consolidation with another entity.
(v) The sale, lease, exchange or mortgage of all or substantially all of NFA property or assets.
(vi) The voluntary dissolution of NFA or the revocation of proceedings therefor.
(vii) The adoption of a plan for the distribution of NFA assets.
(viii) The amendment or repeal of any Board Resolution that, by its terms, provides that it shall not be amended or repealed by the Executive Committee.
Section 3: Composition.
The Executive Committee shall be comprised of the following:
(a) NFA's President, who shall be an ex officio, non-voting member; and
(b) The Chair of the Board, who shall be a non-voting member except in the case of tie votes; and
(c) Eight (8) Directors (including the Chair of the Board) drawn as follows from the following Board categories, with the Board Chair acting as a representative of their Board category (provided that, as noted in clause (b) above, the Chair of the Board shall be a non-voting member except in the case of tie votes):
(i) One (1) Director representing Contract Markets
(ii) One (1) Director representing FCMs and LTMs;
(iii) One (1) Director representing IBs;
(iv) One (1) Director representing CPOs and CTAs;
(v) One (1) Director representing SDs, MSPs and RFEDs; and
(vi) Three (3) Directors who are Public Representatives (see Article XVIII(s)).
Section 4: Board Appointment; Vacancies.
The Nominating and Governance Committee shall recommend (other than the Chair of the Board) Directors to serve on the Executive Committee. Upon consideration of these recommendations, the Board shall appoint by majority vote members of the Executive Committee (other than the Chair of the Board and NFA's President) in accordance with Section 3 of this Article VIII at the regular annual meeting. A vacancy that occurs on the Executive Committee before the expiration of a Committee Member's term or because additional Committee Members in existing or new Member categories are required shall be filled in like manner. Tie votes may be resolved by the Board by random draw.
Section 5: Voting; Quorum.
Each member of the Executive Committee shall have one vote on Executive Committee matters. A majority of the Executive Committee members shall constitute a quorum.
ARTICLE IX: PRESIDENT AND SUBORDINATE OFFICERS
There shall be a President, a Secretary, and a Treasurer, and such other subordinate officers as the Board deems appropriate. The foregoing officers shall be appointed, and may be removed, by the Board, as prescribed in the Bylaws. The President shall be the Chief Executive Officer of NFA and shall have the duties prescribed in these Articles, the Bylaws and Board Resolutions.
[RESERVED]
ARTICLE XI: BYLAWS
[Effective dates of amendments: February 7, 1986; January 1, 1990; August 16, 1993; October 15, 2001; April 1, 2013; May 19, 2014; and October 8, 2015.]
Section 1: Adoption, Amendment and Repeal.
Bylaws of NFA may be adopted, amended or repealed in accordance with Article VII, Section 5, except that the Board shall not take the following actions unless a two-thirds majority of the Directors present and voting approves:
(i) Delegating or otherwise granting authority to any NFA Committee, officer, employee or agent, or any other person, to adopt, amend or repeal any Bylaw;
(ii) Adopting, amending or repealing any Bylaw regarding dues or assessments; and
(iii) Adopting, amending or repealing any Bylaw regarding dues, assessments or similar charges imposed on Contract Market Members.
Section 2: Content of Bylaws.
Except insofar as such matters are expressly contained in these Articles, the following shall be as provided from time to time in NFA's Bylaws: The conditions of, method of admission to, and qualifications for membership and Associate registration; the limitations, rights, powers and duties of Members and Associates; dues and assessments; the method of expulsion from and the termination of membership and Associate registration; the procedures for the settlement of claims and grievances; and all other matters pertaining to membership in, registration with, and the conduct, management and control of the business, property and affairs of NFA.
ARTICLE XII: EFFECTIVE DATE OF REQUIREMENTS
The NFA Board may establish such effective date for any of its requirements as it deems appropriate in light of NFA resources and the prudent initiation of particular NFA operations and programs.
ARTICLE XIII: DURATION
NFA shall have perpetual existence.
ARTICLE XIV: MEMBERS' LIABILITY
The private property of the Members shall not be subject to the payment of NFA's debts or liabilities to any extent whatsoever.
ARTICLE XV: FINANCING
[Effective date of amendments: April 1, 2013.]
Section 1: Costs.
The initial costs of organization of NFA shall be borne by the Organizers, except that the Board in its discretion may reimburse the Organizers for all or any part of such verified organizational expenses.
Section 2: Initial Working Capital.
The initial working capital of NFA shall consist of borrowings from Contract Markets or other sources, to be evidenced by loan agreements, promissory notes or other evidences of indebtedness, which shall be repaid as promptly as practicable from dues, assessments or other revenue received by NFA.
Section 3: Revenue.
The operating income of NFA shall consist of dues, assessments, fees and other charges upon Members and others as prescribed from time to time in NFA's Bylaws, subject to Section 1 of Article XI. NFA schedules of such charges may prescribe different rates or amounts for different categories of Members, or sub-categories therein, endeavoring to reflect differences in the financial burden borne or expected to be borne by NFA in carrying out its duties and programs for each such category or sub-category.
Section 4: Loans and Other Receipts.
Nothing herein shall prohibit or inhibit the Board, in its discretion, from securing loans, accepting gifts, grants or contributions, or otherwise obtaining financing to meet NFA's initial or on-going needs in lieu of or in addition to the other methods of financing recited in this Article.
ARTICLE XVI: MISCELLANEOUS
[Effective dates of amendments: April 14, 1983; July 1, 1987; April 1, 2013; and October 8, 2015.]
Section 1: Registered Office.
The registered office of NFA in the State of Delaware is located at Corporation Trust Center, 1209 Orange Street, City of Wilmington, County of New Castle, Delaware, 19801. The name of its registered agent is the Corporation Trust Company.
Section 2: Indemnification.
NFA shall provide in its Bylaws for indemnification of its past and present directors, officers, committee members, employees and agents, and any person who is serving or has served at NFA's request as a director, officer, committee member, employee or agent of another organization, to the full extent permitted by law
Section 3: Dissolution.
Upon dissolution, the net assets of NFA, after payment of liabilities, shall be distributed to the then Members in proportion to the dues and assessments previously paid.
Section 4: Directors' Liability.
To the fullest extent permitted by the Delaware General Corporation Law as the same exists or may hereafter be amended, a director of this corporation shall not be liable to the corporation or its members for monetary damages for breach of fiduciary duty as a director.
ARTICLE XVII: ADOPTION, AMENDMENT AND REPEAL OF ARTICLES
[Effective dates of amendments: April 14, 1983; February 7, 1986; September 8, 1987; January 1, 1990; October 16, 1992; October 15, 2001; April 1, 2013; May 19, 2014; October 8, 2015 ; and February 15, 2024.]
No provision of these Articles may be adopted, amended or repealed except in the manner prescribed in this Article. Each such proposed change to the Articles shall be reviewed by the Board, and shall be submitted to the Members of NFA only upon approval of the proposal by the Board by two-thirds of the Directors present and voting. If any such proposed change relates to Article III, Section 2, such proposed change shall not be considered by the Board for approval unless at least 60 days written notice of the proposed change has been given to each Contract Market Member. Upon such approval, the proposal shall be submitted to a vote of the Members and shall be adopted upon the affirmative vote of a majority of those Members that cast a vote in each of the categories set forth in Sections 2(a)-2(e) of Article VII.
ARTICLE XVIII: DEFINITIONS.
[Effective dates of amendments: April 14, 1983; February 7, 1986; January 1, 1990; May 1, 1998; January 22, 2001; October 15, 2001; November 16, 2009; April 1, 2013; May 19, 2014; October 8, 2015 and February 15, 2024.]
As used in this Certificate of Incorporation-
(a) "Act"-means the Commodity Exchange Act, as amended from time to time.
(b) "Affiliate"-means, unless otherwise provided, any person that directly or indirectly owns more than 50% of or is owned more than 50% by or has more than 50% ownership in common with another person.
(c) "Associate"-means a person who is associated with a Member within the meaning of the term “associated person” as used in the Act or Commission Rules and who is required to be registered as an “associated person” with the Commission; and any other person designated by the Board to be an Associate.
(d) "Board" or "Board of Directors"-means the Board of Directors of NFA.
(e) "Clearing Organization"-means an entity (whether a unit or division of the Contract Market, or a separate organization) that clears commodity futures transactions or swaps transactions executed on a Contract Market.
(f) "Commission"-means the Commodity Futures Trading Commission.
(g) "Commodity Pool Operator" or "CPO"-means a commodity pool operator as that term is used in the Act, and that is required to be registered as such under the Act and Commission Rules, except any CPO that the Board has designated to be an Associate.
(h) "Commodity Trading Advisor" or "CTA"-means a commodity trading advisor as that term is used in the Act, and that is required to be registered as such under the Act and Commission Rules, except any CTA that the Board has designated to be an Associate.
(i) "Contract Market"-means an exchange registered by the Commission as a designated contract market.
(j) "Fees"-means charges for processing applications, administering qualifications examinations, conducting arbitrations, and other clerical and administrative fees. The term “Fees” does not include dues, assessments or similar charges.
(k) "Futures"-includes options contracts traded on a Contract Market, and such other commodity-related instruments as the Board may from time to time declare by Bylaw to be properly a subject of NFA regulation and oversight.
(l) "Futures Commission Merchant" or "FCM"-means a futures commission merchant as that term is used in the Act, and that is required to be registered as such under the Act and Commission Rules.
(m) "Introducing Broker" or "IB"-means an introducing broker as that term is used in the Act, and that is required to be registered as such under the Act and Commission Rules.
(n) "Large Financial Institution"-means a Swap Dealer included in a well defined, publicly available and independent list of financial institutions that the Board of Directors identifies by resolution from time to time.
(o) "Leverage Transaction Merchant" or "LTM"-means a leverage transaction merchant as that term is used in the Act, and that is required to be registered as such under the Act and Commission Rules.
(p) "Major Swap Participant" or "MSP"-means a major swap participant as that term is used in the Act, and that is required to be registered as such under the Act and Commission Rules.
(q) "Member"-means a member of NFA.
(r) "Person"-includes individuals, corporations, partnerships, trusts, associations and other entities.
(s) "Public Representative"-refers to those members of the Board of Directors who are public directors as that term is defined in Section (b)(2) of Core Principle 16 in Appendix B to Part 38 of the Commission's Rules and is read in the context as applied to NFA.
Effective February 15, 2024 the above paragraph above read as follows:
(s) "Public Representative"-refers to those members of the Board of Directors who are public directors and who meet the requirements of Bylaw 517.
(t) "Requirements"-includes any duty, restriction, procedure, or standard imposed by a charter, bylaw, rule, regulation, resolution or similar provision.
(u) "Retail Foreign Exchange Dealer" or "RFED"-means a retail foreign exchange dealer as that term is used in the Act, and that is required to be registered as such under the Act and Commission Rules.
(v) "Swap Dealer" or "SD"-means a swap dealer as that term is used in the Act, and that is required to be registered as such under the Act and Commission Rules.
(w) "Swaps"-means swaps as used and defined in the Act and in the Commission Rules, and such other swap-related agreement, contract or transaction as the Board may from time to time declare by Bylaw to be properly a subject of NFA regulation and oversight.