Proposed Rule
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PROPOSED AMENDMENTS
(Additions are underscored and deletions are stricken)
REGISTRATION RULES
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Rule 101. Definitions. As used in these Rules:
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(d)Reserved. "Beneficial Owner"-any person who, without limitation, directly or indirectly, creates or uses a trust, proxy, power of attorney, pooling arrangement or any other contract, arrangement or device with the purpose or effect of divesting such person of beneficial ownership of a security or preventing the vesting of such beneficial ownership or of avoiding making a contribution of 10 percent or more of the capital, as part of a plan or scheme to evade being deemed a principal (as defined in paragraph (n) of this Rule) of an applicant or registrant shall be deemed for purposes of such paragraph to be the beneficial owner or the contributor of capital.
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(l)Reserved. "Owner"-means any person who is the holder or the beneficial owner of 10 percent or more of the outstanding shares of any class of stock or has contributed 10 percent or more of the capital of an entity.
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an individual who is:
- a sole proprietor of a sole proprietorship;
- a general partner of a partnership;
- a director, president, chief executive officer, chief operating officer, chief financial officer or a person in charge of a business unit, division or function subject to regulation by the Commission of a corporation, limited liability company or limited partnership; or
- a manager, managing member or a member vested with the management authority for a limited liability company or limited liability partnership; or
an individual who directly or indirectly, through agreement, holding companies, nominees, trusts or otherwise:
- is the owner of 10% or more of the outstanding shares of any class of an entity's stock;
- is entitled to vote 10% or more of any class of an entity's voting securities;
- has the power to sell or direct the sale of 10% or more of any class of an entity's voting securities;
- has contributed 10% or more of an applicant or registrant's capital;
- is entitled to receive 10% or more of an applicant or registrant's net profits; or
- has the power to exercise a controlling influence over an applicant or registrant's activities that are subject to regulation by the Commission; or
an entity that:
- is a general partner of a partnership;
- is the direct owner of 10% or more of any class of an entity's securities; or
- has directly contributed 10% or more of an applicant or registrant's capital unless such capital contribution consists of subordinated debt contributed by:
- an unaffiliated bank insured by the Federal Deposit Insurance Corporation;
- a United States branch or agency an unaffiliated foreign bank that is licensed under the laws of the United States and regulated, supervised and examined by United States government authorities having regulatory responsibility for such financial institutions; or
- an insurance company subject to regulation by any State.
(1) any person, including but not limited to a sole proprietor, general partner, officer, director, branch office manager, designated supervisor, or a person occupying a similar status or performing similar functions, having the power, directly or indirectly, through agreement or otherwise, to exercise a controlling influence over its activities which are subject to regulation by the Commission; (2) any holder or beneficial owner of 10 percent or more of the outstanding shares of any class of stock; or (3) any person who has contributed 10 percent or more of the capital: Provided, however, that if such capital contribution consists of subordinated debt contributed by an unaffiliated bank insured by the Federal Deposit Insurance Corporation, a United States branch or agency of an unaffiliated foreign bank that is licensed under the laws of the United States and regulated, supervised and examined by United States government authorities having regulatory responsibility for such financial institutions, or an insurance company subject to regulation by any state, such bank, branch, agency or insurance company will not be deemed to be a principal for purposes of this definition, provided such debt is not guaranteed by another party not listed as a principal.
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RULE 204. REGISTRATION OF FUTURES COMMISSION MERCHANTS, INTRODUCING BROKERS, COMMODITY POOL OPERATORS, COMMODITY TRADING ADVISORS AND LEVERAGE TRANSACTION MERCHANTS.
(a) Application for Registration.
(1) Except as provided in paragraph (a)(4) of this Rule, application for registration as an FCM, IB, CPO, CTA or LTM must be on a Form 7-R, completed and filed with NFA in accordance with the instructions thereto.
(A) Each application for registration as an FCM or an IB also must be completed and filed in accordance with CFTC Regulation 1.10.
(B) Each application for registration as a CPO or a CTA also must be completed and filed in accordance with CFTC Regulation 4.13(c).
(C) Each application for registration as an LTM also must be completed and filed in accordance with CFTC Regulation 31.13.
(2) Each application for registration as an FCM, IB, CPO, CTA or LTM must be accompanied by a Form 8-R, completed in accordance with the instructions thereto and executed by each natural person individual who is a principal of the applicant, and the fingerprints of such principal on a fingerprint card provided by NFA for that purpose, unless such principal is a director who qualifies for the exemption from the fingerprinting requirement pursuant to Rule 209(c). The provisions of this paragraph do not apply to any principal who currently is registered with the Commission in any capacity or is approved as a principal of a current Commission registrant.
(3) Reserved. (3) In the case of an applicant with a principal that is not a natural person, the applicant's Form 7-R also must be accompanied by a Form 8-R, completed in accordance with the instructions thereto and executed by each natural person who is the owner of the entity that is a non-natural person principal listed on the applicant's Form 7-R. If all of the principals of an applicant's non-natural person principal are also non-natural persons, the Form 7-R must be accompanied by a Form 8-R and fingerprints for each natural person that is an owner of such non-natural persons. The Form 8-R must be accompanied by the fingerprints of such natural person on a fingerprint card provided by NFA for that purpose: Provided, however, that the provisions of this paragraph shall not apply if the non-natural person principal: (i) files reports under the Securities Exchange Act of 1934; (ii) has filed a registration statement under the Securities Act of 1933; (iii) is subject to regulation by the Securities and Exchange Commission; (iv) is an insurance company subject to regulation by any state; or (v) is a bank or any other financial depository institution subject to regulation by any state or by the United States. The provisions of this paragraph also do not apply to any natural person who has a current Form 8-R on file with the Commission or NFA or who has had filed on his behalf a Form 8-R and a fingerprint card pursuant to Rule 204(a)(2). However, NFA may waive the requirement to file a Form 8-R and a fingerprint card if such natural person: (i) is a foreign national who is regulated by a foreign futures authority that provides information to NFA concerning facts which would constitute a potential statutory disqualification and whether such person is in good standing with the foreign futures authority; (ii) has been granted an exemption under CFTC Regulation 30.10; or (iii) is employed by or a principal of a firm which has been granted an exemption under CFTC Regulation 30.10. In appropriate cases, NFA may require further information from the applicant with respect to any natural person or entity referred to in this paragraph.
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RULE 208. REPORTING OF PRINCIPALS.
(a) Unless otherwise provided in this Rule, within 20 days after any person becomes a principal of an applicant or registrant subsequent to the filing of a Form 7-R in accordance with Rule 204 ("new principal"), the applicant or registrant must file a Form 3-R indicating such change and a Form 8-R for each such new principal that is a natural person who is an individual. The Form 8-R must be completed by such natural person individual in accordance with the instructions thereto and must be accompanied by the fingerprints of that natural person individual on a fingerprint card provided by NFA for that purpose. If the new principal is not a natural person, a Form 8-R and fingerprint card shall be filed by any natural person who would have been required to do so in accordance with Rule 204(a), had the new principal been listed on the registrant's initial application for registration. The Form 8-R and fingerprint card need not be filed, however, by any natural person individual who has a current Form 8-R on file.
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RULE 302. TEMPORARY LICENSING FOR GUARANTEED INTRODUCING BROKERS.
(a) Qualifications. Notwithstanding any other provisions of these Rules, and pursuant to the terms and conditions of this Rule, NFA may grant a temporary license to any applicant for registration as an IB upon the contemporaneous filing with NFA of:
(1) A properly completed guarantee agreement (Form 1-FR Part B) from an FCM which is eligible to enter into such an agreement pursuant to CFTC Regulation 1.10(j)(2);
(2) A properly completed Form 7-R;
(3) A properly completed Form 8-R for all persons individuals who are principals and branch office managers, all of whom would be eligible for a temporary license if they had applied as APs;
(4) A signed and dated certification from the FCM providing the guarantee agreement required by paragraph (a)(1) of this Rule, signed by either the chief executive officer or the chief financial officer of the guarantor corporation, a general partner of the guarantor partnership, or the guarantor sole proprietor, stating that:
(A) the FCM has verified the information on every Form 8-R filed pursuant to paragraph (a)(4) of this Rule which relates to the education and employment history during the preceding three years; and
(B) to the best of the FCM's knowledge, information, and belief, all of the publicly available information supplied by the applicant and its principals on the Forms 7-R and 8-R is accurate and complete;
(5) Legible fingerprints of the applicant, if a sole proprietor, and of each principal of the applicant (including each branch office manager) on a fingerprint card provided by NFA for that purpose, unless a principal has a current Form 8-R on file with the Commission or NFA, if the principal is not otherwise required to be registered as an AP of the applicant;
(6) Proof of satisfaction of the applicable proficiency requirement set forth in Rule 401 by all branch office managers and all principals acting in a capacity requiring registration as an AP;
(7) The registration fee required by Rule 203(a)(3); and
(8) All other properly completed forms and documents that are required to become registered as an IB and to become an NFA Member.