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Proposed Rule

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EXPLANATION OF PROPOSED AMENDMENTS

The proposed amendments to NFA Registration Rule 101 redefines the term "principal" to be:

  • holding companies if they are direct 10% or more owners of a registrant's voting securities or directly contributed 10% or more of a registrant's capital;
  • individuals with senior management level titles;
  • individuals, directly or indirectly, who have a 10% or more ownership interest in the registrant, who control 10% or more of the registrant's voting securities;
  • individuals who , directly or indirectly have contributed 10% or more of a registrant's capital or are entitled to 10% or more of a registrant's net profits; and
  • individuals, irrespective of their title, ownership interest or voting control, who have the ability to directly or indirectly control the registrant.

As you are aware, the Commission on October 23, 2001, amended its Rules to re-define the term "principal." The proposed amendments to NFA Registration Rule 101 conforms NFA's definition of "principal" to that of the CFTC's.

The adoption of the new definition of "principal" also necessitates amendments to NFA Registration Rules 204(a), 208(a), and 302(a) to conform to the new definition.

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