Proposed Rule

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NFA staff recently met with fourteen of the largest users of NFA's Online Registration System ("ORS") to obtain their input concerning possible improvements to the registration process. During these meetings, certain FCMs/BDs raised an issue concerning termination notices. NFA's late termination notice rule imposes a $100 fee when a termination notice is filed more than 20 days after the effective date of the termination. This 20-day window is based on NFA Registration Rule 214 and CFTC Regulation 3.31(c)(1) which require termination notices to be filed within 20 days. Article V, Section 3(a) of NASD's Bylaws, however, allows termination notices to be filed within 30 days. The FCM/BD Members indicated that it is an undue regulatory burden for them to file within the 20-day period for some APs while, for the majority of their APs, NASD allows a 30-day period. They also indicated that the 20-day period is particularly difficult to comply with when a termination notice contains disclosure information that has to be reviewed at the branch office and then by the legal and/or registration department, and on occasion the attorney representing the terminated AP, prior to the filing of the notice.

Amendments to NFA Registration Rules 203(a)(10) and 214(a) and (c) will bring NFA's filing period and late fee rule into alignment with the securities industry rule. Since Commission Regulation 3.31(c)(1) also contains a 20-day filing requirement, NFA is concurrently submitting a Petition for Rulemaking to amend that regulation.

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